The government has committed itself to increasing personal tax allowances to £10,000 by 2015. At a time when low to middle earning households are being squeezed, this policy has been promoted as progressive - supporting "millions" not "millionaires". But are tax allowances or tax credits the best way to support working families? This report offers detailed analysis of both approaches.
It begins by outlining amendments to the tax and benefit system which would raise almost £12 billion in a progressive manner. Tax reliefs for the most affluent should be cut, and emphasis is placed on taxation of unproductive wealth rather than income. The revenue raised can be spent on our separate personal tax allowance and tax credit proposals.
CentreForum offers personal tax allowance proposals to increase the personal allowances for both income tax and national insurance to £10,000 alongside a reduction in the higher rate threshold to ensure that higher rate taxpayers do not benefit.
Landman Economics then propose immediate amendments to the Working Tax Credit (WTC) and Child Tax Credit (CTC) systems, to increase the child element of CTC and the basic element and childcare element of WTC.
Download the report.