The Independent today headline, "£2,840 - cost to every family of filling public finance black hole." The problem is that the number is only half right.
The Independent today accompany their story on the Treasury leak with, “£2,840 – cost to every family of filling public finance black hole.” The article goes on:
“Every family in Britain will have to pay an extra £2,840 a year in higher taxes and cuts in public services by 2017 to fix the public finances.”
The problem is that the number is only half right.
Analysis by the Institute of Fiscal Studies, reproduced below, show that announced tax increases including the 50p top rate, and cuts to current spending and investment already account for half the necessary fiscal tightening.
The additional cost for “as-yet unannounced tax increases or current spending cuts” is £1,430. This, however, is an average. As the IFS themselves make clear, “they will fall disproportionaly on those with very high incomes, those on above-average earnings and motorists.”
4 Responses to “Independent half right on costs of fiscal black hole”
matthew bond
Again I am in agreement with you. The labour government already has us half way home. Tory plans on inheritance tax will set us behind status quo. Tories are reckless on fiscal policy.
matthew bond
RT @wdjstraw Indy only half right on costs of fiscal black hole http://bit.ly/2z9KJW. < Tories reckless. Labour already got things in hand.
Matthew Taylor
What on earth are you agreeing with? The piece above doesn’t refer to Tory policy at all…
As for the IFS comment, the term “above-average earnings” is a bit of a trojan horse, given someone earning less than £25k pa is “above average”. These aren’t people on “very high incomes” – who are being separately hit by the new 50% rate – but ordinary people who through their own effort are not reliant on the state, mostly manual and semi-skilled workers.
Core Labour voters in other words.
Anthony Painter
‘Half right’ is very generous. Of course, what the analysis doesn’t calculate or report is what the impact would have been on incomes had the Government not pursued the current fiscal policy. For a rounded picture that would be necessary (or least it should be acknowledged- no matter how moot- there were benefits.)
Of course, it’s a very difficult thing to calculate. But it’s worth pointing out that reports like this only refer to one half of the balance sheet- the costs but not the benefits.