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The £2.2 billion stealth tax increase hidden in the Budget small print

This from CCHQ:
  • "Alistair Darling failed to explain in his speech that all personal allowances were frozen at £6,475 in the Budget (Table A4, page 123)
  • But the latest RPI inflation figure is 3.7% (ONS)
  • According to the Treasury’s own ready reckoner, the revenue gain to the exchequer from not increasing all tax allowances in line with 3.7% inflation is £2.2 billion in 2010-11 and £2.8 billion in 2011-12[1]
  • This is the biggest single tax rise in the Budget
  • A 3.7% increase would correspond to a £240 increase in the personal allowance
  • At the 20% basic rate of tax this means that the Budget contains a £48 a year stealth tax on every basic rate taxpayer starting in April, or £96 a year for a two earner couple
  • Higher rate taxpayers will lose even more because the higher rate threshold was also frozen
  • More than 30 million income taxpayers are affected by this
  • This is not usual practice – in previous years personal tax allowances have been increased by more than inflation."

Over on CentreRight, Harry Phibbs has attacked this "stealth tax" on the poor.

Tim Montgomerie


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