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%”
remarx
Statistics show that the average wage in the UK is £26,500 – what a lot of twaddle! Most workers – in reality – earn about half of that.
According to HM Treasury figures for 2014, families with two adults and one child in the bottom decile of Median Gross Earnings bring in£15,300, whilst the top decile earn £113, 400. Your £ 42, 000 comes into the sixth decile, so yes, you are quite wealthy.
Also, don’t forget these figures are the median.
Cole
You’re obviously living in Daily Telegraph land if you think £42k is sort of average.
Guest
Some people are aright, jack.
And they take it as a licence to screw over the poorer to make more cash.
Leon Wolfeson
“Every worker who can MUST vote at the next election.”
I will be. Probably spoiling my ballot paper, as Labour have convinced me not be significantly better overall, and with policies I simply cannot lend my name to.
Stephen
How disgraceful of the media to be taken in by the claim of the income tax changes being aimed at middle earners. Even the rich don’t benefit as much as it seems anyway. Not mentioned above, is that the increase in tax rate will only be implemented in perhaps 5 years time (the details are vague) when much of the increase in allowance is lost anyway due to inflation.