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Ed Balls renews attack on tax plans Ed Balls renews attack on tax plans
(6 months later)
Families with children where one parent works will be hardest hit by new tax changes that come into force on Saturday, according to shadow chancellor Ed Balls, who says gains from a higher personal allowance of nearly £10,000 are "swamped" by higher VAT and cuts to tax credits.Families with children where one parent works will be hardest hit by new tax changes that come into force on Saturday, according to shadow chancellor Ed Balls, who says gains from a higher personal allowance of nearly £10,000 are "swamped" by higher VAT and cuts to tax credits.
Balls said prime minister David Cameron had prioritised tax cuts for millionaires over "squeezed" workers after new figures commissioned by the Labour party from the Institute for Fiscal Studies show that a one-earner family with children will lose an average of just under £4,000.Balls said prime minister David Cameron had prioritised tax cuts for millionaires over "squeezed" workers after new figures commissioned by the Labour party from the Institute for Fiscal Studies show that a one-earner family with children will lose an average of just under £4,000.
The thinktank's data shows that a couple with children, where one parent works, will be worse off by £3,995.65 a year on average after the tax and benefit changes introduced since 2010. Average households will be worse off by £891 a year.The thinktank's data shows that a couple with children, where one parent works, will be worse off by £3,995.65 a year on average after the tax and benefit changes introduced since 2010. Average households will be worse off by £891 a year.
Balls highlights a series of changes that will be introduced with the start of the new financial year. These include a freeze in child benefit for a third year and an increase in tax credits by just 1%. The personal allowance will increase to £9,440 although the higher threshold will fall to £41,450 to help pay for this.Balls highlights a series of changes that will be introduced with the start of the new financial year. These include a freeze in child benefit for a third year and an increase in tax credits by just 1%. The personal allowance will increase to £9,440 although the higher threshold will fall to £41,450 to help pay for this.
Labour argues the figures show the government has the wrong priorities because the tax changes include a cut in the top rate of income tax from 50p to 45p. This will give 13,000 people who earn more than £1m an average tax cut of £100,000. The change will benefit 267,000 people earning £150,000-plus a year.Labour argues the figures show the government has the wrong priorities because the tax changes include a cut in the top rate of income tax from 50p to 45p. This will give 13,000 people who earn more than £1m an average tax cut of £100,000. The change will benefit 267,000 people earning £150,000-plus a year.
The shadow chancellor said: "These figures show the full picture David Cameron and George Osborne do not want you to see. They reveal that any gains ministers boast about from the rise in the personal allowance are swamped by higher VAT, cuts to tax credits and child benefit. "The shadow chancellor said: "These figures show the full picture David Cameron and George Osborne do not want you to see. They reveal that any gains ministers boast about from the rise in the personal allowance are swamped by higher VAT, cuts to tax credits and child benefit. "
The IFS data shows that lone parents will also be hit by the changes. A lone parent in work will be worse off by £1,225.95 a year while a lone parent out of work will lose £1,206.50. Couples with children where both parents work will be worse off by £1,869.09 while a similar couple with no children will lose £672.10.The IFS data shows that lone parents will also be hit by the changes. A lone parent in work will be worse off by £1,225.95 a year while a lone parent out of work will lose £1,206.50. Couples with children where both parents work will be worse off by £1,869.09 while a similar couple with no children will lose £672.10.
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