‘The Institute for Fiscal Studies has suggested that households can expect lower incomes, whoever wins the election. The think-tank said that, on average, most people will see tax and benefit changes which will reduce their income.
It predicted the Conservatives’ main tax cut pledge, an increase in the personal allowance, while sold as a boost to ordinary working families, would be of most value to middle and higher earners. The 44% of taxpayers who already earn too little to pay income tax would not benefit at all; while two-earner couples benefit twice. Meanwhile, Labour’s proposal for a 10p rate, paid for by scrapping Tory proposals for a married tax allowance, would amount to replacing “one small complication in the tax system with another” and be “worth a princely 50p a week”, the IFS said.
It also expressed scepticism about the claims of all the main parties to be able to raise large sums through anti-tax avoidance measures, stating: “There is apparently a huge amount of money to be extracted through a clampdown on tax avoidance (mysteriously missed by all previous clampdowns)”. The Conservatives claim to be able to raise £4.6bn, Labour £6.7bn, and the Liberal Democrats £9.7bn — targets the IFS described as, “at best aspirational”.
On the subject of a mansion tax, the IFS has said it would be much more sensible to let the council tax take care of wealth in the housing market. Summing up the think-tank’s findings, the IFS’s Robert Joyce accused all the main parties of having an “extremely irritating preference for ill-defined and opaque tax changes”.
Sources: Financial Times, The Daily Telegraph, The Times, The Guardian, Evening Standard, Daily Mail, The Independent, The Sun
PM pledges five year ban on tax rises
David Cameron will today promise to enshrine in law a pledge that there will be no income tax, national insurance or VAT rises for the next five years under a Conservative government. The prime minister will commit to introduce the “tax lock” legislation within the first 100 days of a Conservative government. It follows a previous promise by the party to raise the IHT threshold to £1m. “When it comes to your tax bill: Do you trust the people who taxed you to the hilt when they were in power and still haven’t come clean about the taxes they want to increase next time round? Or do you trust the Conservatives?” Mr Cameron will state.
Source: Financial Times, The Daily Telegraph, The Times, Daily Express, Daily Mail’
They are all to a man bribing us with our own money, of course, which is insulting. But this latest Conservative gambit is not only insulting but also irresponsible: no one can know what economic squalls we will have to weather over the next five years and to tie a Chancellor’s hands in this way is foolish. That said, the chances of any party having an overall majority seem slim – so expect every promise made by any of them to be cast aside in the name of realpolitik and coalition negotiation.