What is happening to your tax bill with the Emergency Budget?

June 22, 2010 4:12 PM

The Emergency Budget gives with one hand and takes away with the other.  Most people will pay less income tax - with the increase in the personal allowance from next April - but they'll have to pay more in VAT from the end of this year.  You can understand the balance between the two by looking at graph on the different income deciles is in Chart A1(Chart Removed):

So all families are going to pay more tax.  Even for poor families, the bill will run into hundreds of pounds.  And by far the biggest new burden on ordinary families is VAT.  But, of course, a few hundred pounds a year is a larger share of a smaller income.  So for the relative impact we need to look at Chart A2(Chart Removed):

What that shows is that the effect as a share of income is pretty flat across the income distribution, apart from the top decile, at between 1 and 2 per cent of income.  The coalition had no mandate for a big hike in VAT that will be a big increase in tax on the poor, our video yesterday is still very relevant:

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