A national newspaper is calling for tax cuts aimed at the middle classes. While I am sure that a lot of middle class people would appreciate a tax cut, it is fair to point out that cutting income tax would make very little difference to the genuinely poor.
At the present time, a working person in this country typically enjoys a personal allowance for income tax of £9,440. That is roughly the income you would derive from working thirty hours each week at the minimum wage.
Anyone earning less than £9,440 each year has nothing to gain from either an increase in the personal allowance or a cut in the basic rate of income tax. Likewise, anyone earning less than £12,000 per year has very little to gain from either an increase in the personal allowance or a cut in the basic rate of income tax.
Things that would really benefit people on low incomes would include lower council tax bills and increased tax credit payments.
Ask yourselves two questions. First, what was the total net income including tax credits of a single person
with no dependant children working thirty-five hours each week for the
minimum wage in the tax year 2010/2011? (This was the last tax year in which the present government did not set the rules for taxation.)
Second, what will be the total net income including tax credits of a single person
with no dependant children working thirty-five hours each week for the
minimum wage in the tax year 2013/2014?
Someone working thirty-five hours each week for the
minimum wage in the tax year 2010/2011 received tax credits of nearly forty pounds per week, but in the current tax year they receive less than ten pounds each week.
This shortfall is not made up for by income tax cuts, nor could it be. It could be made up for by cuts to council tax, but this has not happened.
If you have a Conservative or Liberal Democrat MP, then you might like to ask him (or her) to explain why this reduction in tax credits should not be seen as evidence of a government not caring about working people.
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