Beware of Tories bearing gifts

alittleecon

Another week, another speech from David Cameron. This time it was on tax, and he had two headline announcements – that the tax threshold for the basic rate would be increased to £12,500 while the threshold for the 40p rate would go up to £50,000. This, Cameron said was a ‘reward‘ for putting up with austerity so obediently. Both these measures help the better off more than the lower paid, as those on the lowest pay already don’t pay income tax so raising the basic rate threshold does nothing from them.

For all the talk of lifting people out of tax and people being better off to the tune of £x000 a year, the reality is actually very different. This chart (click on it to enlarge) is taken from a recent publication from the Institute of Fiscal Studies, and it shows the net impact of the Coalition’s tax…

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