The respected economic think tank, the Institute of Fiscal Studies, have released a sneak preview of their annual 'Green Budget', to be launched on Wednesday. What we know so far is that the IFS are saying that tax changes to be brought in in April will cost the richest tenth of households typically 3 per cent of their income, compared to 1 per cent for the general population.
The respected economic think tank, the Institute for Fiscal Studies, has released a sneak preview of their annual ‘Green Budget’, to be launched on Wednesday. What we know so far is that the IFS are saying that tax changes to be brought in in April will cost the richest tenth of households typically 3 per cent of their income, compared to 1 per cent for the general population.
Other findings include:
• 750,000 individuals are due to enter the higher rate taxpayers as a result of a reduction in the level of income at which the higher rate starts to take effect;
• Those with incomes of over £100,000 will be affected by the loss of personal tax allowances;
• Those on means-tested benefits will be worse off due to the decision to link payments to the Consumer Prices index (presently at 3.1%) instead of the Retail Price Index or the Rossi Index (presently at 4.6% and 4.8% respectively)
The IFS has described the pattern of winners and losers as complex. Left Foot Forward will be reporting on the analysis as it is unveiled.
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17 Responses to “IFS: Richest to be hit hardest by tax changes in April”
Ash
Anon, Mike at al: since you’re so enthusiastic to hear what the IFS has to say about the distributional impact of these latest tax and benefit changes, you might want to remind yourselves of what they said last year about the distributional impact of 13 years of tax and benefit changes under Labour:
https://www.leftfootforward.org/2010/03/labours-robin-hood-legacy/
If that truth is not inconvenient enough for you, how about this one: the most progressive tax and benefit being enacted by the Coalition are those they inherited from Labour:
https://www.leftfootforward.org/2010/09/the-graph-that-shames-nick-clegg/
Liz McShane
Anon – I think taxation should be proportionate and obviously the more you earn then the more you should pay & that the argument for taxation & its benefits (of funding NHS, Education etc)should be made more effectively.
Anon E Mouse
Ash – I don’t care where the ideas come from as long as they are good ideas.
All governments pinch ideas from each other – PFI schools and hospitals from the Tories and private healthcare in the NHS from Labour.
I am just glad the balance on taxation is changing so those with more money pay more tax but more importantly the poorer pay less. Instead of acting in such a tribal manner here I would have thought anyone with”Socialist” leanings would have been pleased for those less fortunate.
That’s not very New Labour I know but I like it….
Mike Thomas
Ash,
Bunkum.
Perhaps this government isn’t comfortable with people getting filthy rich eh?
The 10p tax scandal was about as regressive a tax hike as you could get. As for Labour’s benefits, they were a deliberate poverty trap with a marginal tax rate of 90% on withdrawal.
Not to mention Gini worsening under New Labour than under Thatcher.
Ash
Mike,
OK, since you don’t care for proper evidence of the sort the IFS deal in, how about the anecdotal variety: I know from personal experience that Labour succeeded in redistributing wealth to at least some poor families without trapping them in poverty, because Tax Credits lifted my own family out of poverty (pulling our net income up from around £900 a month to around £1250) and allowed our income to keep climbing. (That doesn’t mean the withdrawal of the 10p rate wasn’t a bad thing, but it does put it in a bit of perspective. When you take *all* the relevant tax & benefit changes into account, they tended to make poorer people better off.)
You’re right that New Labour’s attitude to the ‘filthy rich’ stank, and they didn’t seem to realise that the gap between rich & poor matters in itself (which is why I’m glad Ed M is now talking about equality again.) But it’s just not true that poor people actually got worse off under Labour; in general, they got better off.
Anon – fair enough; good ideas are good ideas. But the balance is not really changing. The tax & benefit changes the Coalition inherited from Labour continue a trend the IFS had already identified last year: more being taken from the rich and less from the poor. (Some of the Coalition’s own changes ‘water down’ that effect, of course – e.g. the VAT hike. So the main change is that the Coalition’s changes make the poor worse off as well as the rich.)