Published by , March 13th 2010 at 12:01 am
Lib Dem tax policy “fails the fairness test”
Nick Clegg’s planned policy of “tax cuts for people and families on low and middle incomes” would be deeply regressive according to a detailed analysis by Tim Horton and Howard Reed for Left Foot Forward.
In December, the Liberal Democrats set out a policy to “raise the threshold at which people start paying income tax from current levels to £10,000″. They have made this policy one of four central “tests” for cooperation with a minority government in the event of a hung parliament and Nick Clegg has said:
“This will be a huge change to our society, to make the tax system fair. Offering real help – and hope – to millions of low income families. A vital step towards delivering real social justice for all.”
But a detailed report, ‘Think again, Nick! Why spending £17 billion to raise tax thresholds would not help the poorest’ (pdf) by Tim Horton and Howard Reed for Left Foot Forward shows that:
• the measure would do nothing to help the very poorest, who don’t have income large enough to pay tax;
• only around £1 billion of the £17 billion cost (6 per cent) actually goes toward the stated aim of lifting low-income households out of tax;
• households in the second richest decile would gain on average four times the amount than those in the poorest decile; and
• the policy would increase socially damaging inequalities between the bottom and middle.
Horton and Reed conclude that:
“the Liberal Democrats’ proposed tax cut fails the fairness test.
“Spending £17 billion on increasing the personal allowance is a very poor way to help those on low incomes. It could actually harm the welfare of low-income households by increasing inequality and relative poverty.”
While debates about tax and spend will no doubt be animated at the Lib Dems’ conference in Birmingham, Left Foot Forward hopes that this factual analysis will assist the discussion.
• Download the report by clicking here.
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@Kopmatt09 not convinced about that http://bit.ly/9KPWKf
[...] on the progressive blogosphere Left Foot Forward, Tim Horton and Howard Reed show quite how regressive Liberal Democrat Tax policy truly is. [...]
Why Nick Clegg is plain wrong on tax. His plans are regressive, and he should know it. For more see-> http://bit.ly/bf6SeD #GE2010 #GE10
RT @leftfootfwd: Lib Dem tax policy "fails the fairness test" http://bit.ly/9veG2B
@WarrenPearce 10k tax is not redistributive http://bit.ly/9lAsfQ; AV is majoritarian not PR; agreed to Tory cuts; Europe/immigration
[...] – as we pointed out in our analysis of this tax cut before the election – this claim is totally [...]
[...] – as we pointed out in our analysis of this tax cut before the election – this claim is totally [...]
The 10K tax threshold rise doesn't help the poorest earners, dissection here: http://www.leftfootforward.org/ and http://bit.ly/9KPWKf
Will the new £10K tax band help the poor? http://bit.ly/9KPWKf
RT @leftfootfwd: Lib Dem tax policy "fails the fairness test" http://bit.ly/9veG2B
#takeitback #ukvote #condem
RT @leftfootfwd: Lib Dem tax policy "fails the fairness test" http://bit.ly/9veG2B
Will Staw, Have you taken in account the effects of the national insurance rise? The allowance and national insurance seems to create a balance…
http://www.telegraph.co.uk/news/newstopics/politics/7721618/Coalition-government-tax-cuts-of-140-for-workers-on-basic-rate.html
RT @leftfootfwd: Lib Dem tax policy "fails the fairness test" http://bit.ly/9veG2B
[...] Lib Dem tax policy “fails the fairness test” – Nick Clegg’s planned policy of “tax cuts for people and families on low and middle incomes” would be deeply regressive according to a detailed analysis by Tim Horton and Howard Reed for Left Foot Forward. Tags: economics liberaldemocrats coalition electoralpolitics [...]
[...] Tory original, though even superficially laudable ideas such as a higher tax threshold are actually regressive in their impact. More importantly, when it comes to the big fiscal issue, the tax changes are small [...]
[...] tax system, by initially increasing personal allowances to £10,000 (a highly regressive policy, as explained in detail by Left Foot Forward), funded through departmental cuts on ‘waste’ and raising CGT [...]
[...] March, Left Foot Forward published a report – “Think Again Nick – Why spending £17 billion to raise tax thresholds [...]
[...] economic future are not sacrificed in his attempt to balance the books.” A report for Left Foot Forward earlier this year showed that raising the tax threshold in this manner would do nothing for some 3 [...]
[...] IFS analysis on who gains from raising income tax thresholds was very similar to the earlier critique published by Left Foot Forward and the [...]
@asilbs2 "Some pros of this budget include the elimination of tax for 850,000 of the poorest of the poor" http://bit.ly/a3LkNb
[...] IFS analysis on who gains from raising income tax thresholds was very similar to the earlier critique published by Left Foot Forward and the [...]
[...] Second, he could change the ratio of tax rises to spending cuts so that they reflect the 2:1 ratio favoured by Labour or the 1:1 ratio favoured by Norman Lamont and Ken Clarke in the 1990s and by a number of countries embarking on similar deficit reductions. The Chancellor opted against this route in order to announce tax cuts for big businesses including the banks; cuts to employers’ national insurance; and for the Lib Dems’ regressive tax threshold rise. [...]
Just in case there are any starry eyed LibDems out there. Tax threshold proposal IS regressive too http://j.mp/bf6SeD
[...] month, Left Foot Forward posted a blog highlighting research by the two of us, which argued that the Liberal Democrats’ manifesto pledge [...]