![]() ![]() The chancellor has not specifically helped those most severely hurt by the inflationary surge. While the Treasury receives buoyant tax revenue from inflation, it will delay compensation until 2023-24. The April 2022 indexed 3.1% rise will reflect September 2021 CPI inflation and last until March 2023. Meanwhile any household dependent entirely on state benefits and state pensions will receive no help from the inflationary spike. This will claw back all but £300 of the £3,000 increase in the national insurance threshold. Over five years, the personal allowance will be reduced by £2,700 in real terms on the OBR’s forecast 21.4% consumer price index rise. But the burden on the lowest income households will increase relatively and the pain absolutely. Income tax will become more progressive as tax paid on high incomes will go up more than on low. Sunak has frozen personal allowances and tax bands for the foreseeable future. Income tax and national insurance contributions are moderately progressive. Benefits in kind reduced final income inequality to 6 times. The post-tax income ratio thereby increased. As the lowest decile spend all, if not more, of their income, they bear the heaviest spending tax burden. The top decile only paid 2.5 times the indirect taxes the lowest paid. The top 10% paid 17 times the income tax and national insurance, reducing disposable income from 13 times to 11.6 times that of the bottom 10%. Welfare and state pensions reduced the top decile’s pre-tax income to 13 times that of the lowest. In 2019-20, the top decile’s income was 22 times the lowest decile’s income. The British tax system does little to reduce after-tax income inequality. The chancellor and the OBR chose not to mention it. Redistribution should have been transparently at the heart of the statement. The bill should have been presented to those who can best afford it. ![]() Given significant income and wealth inequality, help should have been specifically given to impoverished and struggling households. Whatever he gives away he must obtain by taxing, borrowing or printing. He cannot protect everybody from energy and food price increases. The wealthy burghers of Westminster would not allow it. Having played the Sheriff of Nottingham taking from the poor, Sunak dare not transparently play Robin Hood. There was no analysis of income distribution, of where the burden falls or how the announced measures address it. Neither the Treasury nor the Office for Budgetary Responsibility have explained what the crisis is. For impoverished households, entirely dependent on welfare benefits and state pensions, rising food and energy prices are a catastrophe. Chancellor of the Exchequer Rishi Sunak claimed to address the cost-of-living crisis on 23 March in his Spring Statement. Covid-19 and now the Ukraine war have materially reduced Britain’s real national income and we are all worse off. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |