Spring may be in the air in the UK – especially in the southern half of England – but tax increases and benefit cuts are dampening the atmosphere. In what is now being dubbed “Worse Off Wednesday” the new tax announcements are set to leave Brits with £600 less in their pockets per annum. This isn’t exactly great news for UK citizens who are already feeling more than just a financial pinch with an inflation rate higher than the last two decades. As well, grocery bills have increased and fuel has “reached record levels,” with VAT also escalating 2.5 percent.
Lies, Damned Lies and Statistics
Of course the Treasury is trying to hide the facts on the ground claiming that it will only be the particularly wealthy who will be impacted by these taxes. It is claimed that those earning up to £35,000 will actually gain and vis-à-vis benefits, since 800,000 won’t be paying taxes (and be accruing a personal allowance escalation from £6,475 to £7,475).
That maybe. But if you speak to the average family in the street, they won’t be popping open the champagne anytime soon following the move to “lower the salary at which workers start paying the higher rate tax of 40 per cent from £43,875 to £42,475.” This will lead to around 750,000 individuals being caught in the “tax trap.”
However, for those “on the lowest incomes” there is some good news ahead. It’s the middle-incomers who have to watch out as does everyone else vis-à-vis the other increases the country is encountering. As well, high street stores are likely to suffer since according to Vicky Redwood, an economist, “it is all but certain that household spending will fall this year,” which will of course negatively impact stores.
Blame it on the Government
Of course, there’s always politics to put the blame on when economics go belly-up and that’s exactly what Treasury Secretary Justine Greening is doing. Except she’s not blaming her own government: “Labour left behind a complete mess with no plan to deal with it, apart from to run up more debts for the next generation to pay off.” Given the National Insurance increase too, things really aren’t looking good.
This isn’t such new news though. Whenever there is big tax news it’s usually the middle-incomers bearing the brunt of it all. While it is thus Worse Off Wednesday for them, the hope is that these moves will in the long-term, lead to a better economy for all Brits.
