The tax changes that came into effect earlier this month will hit people in Tameside hard. Figures from the Institute for Fiscal Studies show that families will be an average of £891 worse off in the new financial year starting this month because of tax rises and cuts to tax credits and benefits introduced since 2010.
Taking into account all changes to tax, tax credits and benefits that have been introduced since 2010, households in the UK will on average be £891 a year, or £17 a week, worse off in the 2013/14 financial year.
The analysis is based on figures published by the IFS in its Green Budget in February and its post Budget briefing earlier this month. I am appalled by these latest figures from the independent IFS. Families across the country are being hit by this Government, but the North West is being hit particularly hard. It cannot be right to force millions to pay more while millionaires pay less now that the top rate of income tax has been cut from 50p to 45p. This will benefit 267,000 people earning over £150,000, including only 13,000 people earning over £1 million who will receive an average tax cut of £100,000, according to figures from HMRC.
Underneath the headline figure, the Joseph Rowntree Foundation says that 2.4 million families on low incomes will pay on average £138 more in council tax in the year 2013/14 as a result of cuts to council tax benefit. And under the notorious Bedroom Tax, 660,000 people are now losing an average of £728 per year or £14 a week. The final insult from George Osborne comes in the form of changes to the age-related allowance – the so called ‘Granny Tax’ – which will see 3.6m pensioners lose £68 a year and 360,000 people turning 65 this year lose £268, according to the IFS.
The whole country has seen whose side David Cameron and George Osborne are really on. One thing is clear; it is not the better off who are paying the price for their economic failure. On average, families will be £891 worse off this year because of changes introduced since 2010. All this comes at a time when a flatlining economy has seen prices rise faster than wages and unemployment rise again this month.
While Ministers trumpet the small rise in the income tax personal allowance, they should admit that it is hugely outweighed by things like cuts to tax credits and child benefit, higher VAT, the Bedroom Tax and the Granny Tax. They are giving with one hand, but taking away much more with the other. This Government is not trimming back the benefits system; it is hitting those who do all they can to work as well as those who have worked all their lives.
This article was written for the Tameside Reporter newspaper and will be published next week.