Income tax generosity

 Osborne may regret income tax generosity

The Times’ Ian King says that George Osborne’s policy of ensuring nearly half of British adults do not pay income tax may prove unwise in the long run. Figures from the IFS show 43.8% of British adults pay no income tax, but as recently as the 2007-08 tax year the figure was only 34.3%. Mr King says that in terms of helping the lowest-paid workers, the policy has not been effective, as millions of low paid workers still face a direct tax on their earnings via NICs. At the same time, he says that the chancellor’s “deliberate hollowing out of the tax base” will have severe consequences for both society and the economy, as people who do not pay income tax will have little interest in voting for politicians promising to cut income tax.

Source: The Times (02/05/2016)