Think tanks give mixed reaction to Budget
The TaxPayers' Alliance is, on the whole, pleased with the Budget:
“There is a lot of good news in the Budget for families who have struggled in the recession. The cuts in corporate and top rate taxes will improve the incentive to invest and innovate, meaning higher wages before tax. Then a higher personal allowance will mean they can keep more of the money they earn. Unfortunately some of the money is coming from higher taxes on pensioners; there is no relief for motorists from terribly high taxes on petrol and diesel; higher taxes on tobacco will be a boon for criminals selling dodgy cigarettes; and yet another higher rate on Stamp Duty is an unfortunate hike in an ugly tax. But overall this is a Budget that should ease the pressure on people’s living standards and allow most of them to keep more of their money.”
The Adam Smith Institute fears the cut in the 50p rate to only 45p will institionalise the top rate of tax at a new high level:
"It’s encouraging to see some steps in this budget towards greater tax simplification. Cutting the 50p tax rate to 45 percent is a step in the right direction, but the Chancellor should have scrapped this altogether. The danger is that the 45p will become a permanent rate. It is also very welcome that the personal allowance has been raised, but the reduction of 40p rate threshold will mean that only basic rate taxpayers will benefit from the personal allowance rise. Up to 300,000 people will now find themselves upper rate taxpayers as a result. This will hit single-earner families particularly hard."
"The government deficit reduction strategy has already drifted off target and relies on rather optimistic growth figures over the next few years. The Chancellor should seek to find greater reductions in state spending to allow for substantial, across-the-board tax cuts before the end of this Parliamentary term.”
The Centre for Social Justice regrets the fact that the Chancellor found no money for a marriage tax break:
"IFS figures show how recognising marriage in the tax system would benefit the poorest households more than the richest, whereas the commitment to raise income tax thresholds has the opposite impact. Claiming that there is no money to fund some form of a transferable allowance (such as to married couples with children under 3 years old, costing £0.8 billion) is misleading. This Budget has allocated £3 billion to fund the Liberal Democrat priority of higher income tax thresholds. Raising the personal allowance to £8,930 (instead of £9,205) would have funded both an increase in the tax threshold and a marriage tax break - the flagship Conservative family policy. It seems at least another year will pass before the Coalition summons up the courage to take their marriage vows seriously."