Saturday, 4 September 2010

The squeeze - tax bands

Over on Conservativehome Tory councillor Simon Maynard takes up the themes of a welfare system with universality as a principle, the definition of the middle and the squeeze.  He highlights the impact of stealth taxation by not increasing tax bands appropriately has placed many more in the higher tax bracket.  The practical result of this:

"In the early 1990s, such payments might have contributed towards little Johnny’s piano lessons; now they make a vital contribution to household bills."

The resultant problem for the Coalition is any moves on universality will be much more noticed than they may desire.  He also highlights a noteworthy stat:

"As Ed Miliband is so fond of reminding audiences, only five per cent of people in the UK earn over £60,000."

His conclusion is that over the life time of the parliament the Coalition should lower taxes, not through the rate cuts, but through updating banding levels to where they should be.

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