A Budget For Working Families?
Daniel Chandler
This blog originally appeared on The Huffington Post
Chancellor George Osborne says tomorrow's budget will be a budget for working families. "The bulk of the measures in the budget are going to be targeted at working people on low and middle incomes" he told the BBC's Andrew Marr on Sunday.
So, with budget day upon us, it's worth asking what a budget that genuinely put working families first would look like. At its heart would be a reversal of planned cuts to the Working Tax Credit (WTC) - which, as they stand, are set to hit precisely the people Osborne claims to be trying to help.
Why prioritise WTC rather than further increases in the personal tax allowance (PTA)? After all, if rumours are to be believed, working families can count on a substantial further increase in the level at which individuals start paying income tax towards the Lib Dem's flagship target of £10,000. This move will indeed benefit most working people on low to middle incomes - though not those earning less than the current threshold, due to rise to £8,105 in April. But raising the PTA is not a good way of targeting support at low and middle income households with relatively small benefits spread far up the income distribution, only petering out when individual earnings reach well over £100,000.
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