Mini budget statement

Tax and the Family is highly critical of today’s announcement by the Chancellor of the Exchequer to abolish the 45p rate and advance to next year the reduction to 19p in the basic rate of tax. This is because he is focussing the tax reductions on those with higher incomes, while very largely ignoring those who pay income tax even though they are in poverty.

Because the tax system is based on individuals, someone’s liability to tax does not reflect their families or their circumstances. One result is that people may pay income tax even though they are in poverty. Over the years we have put forward a number of recommendations as to how this might best be tackled. Past Governments have not pursued these, and today the Chancellor has chosen a measure which will primarily help the better off while not focussing support on those taxpayers who are least well off.

The chancellor is not allowing people to share their personal allowances as proposed by the Prime Minister during her leadership campaign. This would have been a far more cost effective way of helping families than cutting the basic rate of income tax or reducing the national insurance rate. The mini budget does not make the tax system fairer for families.