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Britain's Hidden Tax: Taking From the Poor to Pay the Rich

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The Independent uncovers Britain's stealth tax on its poorest residents:

Tax cuts for low and middle-income families in April will be dwarfed by hidden reductions in tax credits, according to a study for The Independent.

The analysis found that the £1bn of tax cuts in April will be outweighed by reductions of more than £2.5bn in the complex tax-credit scheme.

Most of the cuts to credits, which top up the wages of low-income families in work, will take effect from April and could catch families unaware.

The Government's flagship policy of raising income-tax thresholds has been trumpeted by the Liberal Democrats as their main achievement since the Coalition was formed last year – and a major boost for the low-paid.

But the Resolution Foundation think tank, which undertook the study, questions the fairness of the changes.

The report continues:

The foundation said the biggest winners will be those with middle to high incomes: "Overall, the measure remains regressive in the lower half of the distribution... Not only is the change huge overall; it is not widely understood or known about – being made up of a number of small changes to both the child tax credit and working tax credits."

The study concluded: "Low to middle-income households receive 56 per cent of all tax credits in cash terms – and so will be hit disproportionately."

This is typical Tory economics - present tax cuts as a gift to 'working families' while slashing their benefits and shifting money upwards towards the upper classes. Why anyone thinks Tories are suddenly a force for progressivism is beyond me - it's the same old trick disguised behind new gimmicks.

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