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

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.

Ben Cohen is the editor and founder of The Daily Banter. He lives in Washington DC where he does podcasts, teaches Martial Arts, and tries to be a good father. He would be extremely disturbed if you took him too seriously.