The benefit freeze announced on Monday (saving: £3bn) is paying for a tax cut for the top 15 per cent (cost: £4bn).
The benefit freeze announced on Monday (saving: £3bn) is paying for a tax cut for the top 15 per cent (cost: £4bn)
On Monday, the chancellor George Osborne announced that under another Conservative government there would be a two-year freeze on benefits paid to working age people. The freeze will come in in April 2016 and comes on the back of a 1 per cent cap that was announced in 2012.
The freeze (in reality a cut) will hit 10m households. Half of those hit by the policy are in work.
In other words, George Osborne will make many hardworking people worse off, with families with children set to lose up to £490 a year in child benefit and tax credits.
Contrast this with today, where prime minister David Cameron announced that the threshold at which people will start to pay the top rate of tax will rise from £41,900 to £50,000.
The 40p tax rate is currently only paid by the top 15 per cent of earners, yet the move is being billed by the Conservatives as a boost to those on ‘middle incomes’.
This means that (and it probably doesn’t take me to tell you this) the Tories plan to make 10 million households poorer, saving £3bn, to fund a tax cut for the top 15 per cent of the population (the idea of raising the top rate to £50,000 was first mooted by Tory right-wingers Priti Patel and Kwasi Kwarteng in 2012. The cost? £4 billion).
The benefit freeze announced on Monday (saving: £3bn) will hit the poorest third in society in order to pay for a tax cut for the top fifth (cost: £4bn).
During his speech Cameron also pledged to raise the tax-free personal allowance from £10,500 to £12,500. However as Left Foot Forward has previously noted, the greatest percentage change in net income from increases in the the personal tax free allowance are seen by those at the upper end of the income scale.
Analysis carried out for Left Foot Forward in 2010 found that some three million households in the poorest quarter of the household income distribution would not benefit from raising the personal allowance to £10,000. Raising the income tax threshold can, after all, only benefit those who earn enough money to pay tax.
The latest tax and benefit proposals from the Conservatives are a naked redistribution of wealth from the bottom to the top. Otherwise known as class war.
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20 Responses to “So now we know: the benefit freeze is paying for a tax cut for the top 15%”
Leon Wolfeson
Oh yes, this is an ideal time to lower tax on the rich, we’re in…oh wait, this is a terrible time for the economy.
Leon Wolfeson
There’s little to no evidence Labour are interesting in raising welfare or investing.
Moreover, afaik Gove lied. Politicians do this, you know.
Cole
Oh bug surprise: Tory tax cuts for the wealthy, again. Just shows they don’t really care about the deficit. It’s just an opportunity to shrink the state.
Jack
You think £42k a year is wealthy? You must have very limited horizons. 42k is just over 1.5 times average earnings. If you’re a graduate aged, 41, twenty years into a career, it is a modest achievement. Then factor in a wife and three kids.
David Beckham is wealthy. Alan Sugar is wealthy. A middle aged guy earning £42k is not wealthy.
Florris
Yes, £42k is wealthy. Quite wealthy.