Tax cuts could boost economy and family finances

Thursday, 07 April 2011 04:45

A strategy of tax cuts, rather than increases, could be the key to getting family finances and the nation's economy into stronger territory.

The Institute of Economic Affairs says high taxes could actually be worsening the UK's deficit, as they oppose spending and natural economic growth.

Instead, the organisation estimates households face an additional £19,000 each added to the national debt during the course of the current parliamentary session.

"The 50p top rate [of income tax] is a political stunt, which is almost certainly losing the Exchequer money," says Mark Littlewood, director general of the institute.

Meanwhile, the Trades Union Congress says each family could lose an average of £2,500 in tax credits due to changes introduced on April 6th.

Factors included in the calculation comprise the freeze in working tax credits until 2014, reduced second income allowances, the removal of the proposed toddler tax credit and a tapering of family allowance in line with earnings.

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