IFS analysis undermines Ministers' claims about £10,000 personal allowance - Reeves

9 March 2012

Rachel ReevesRachel Reeves MP, Labour's Shadow Chief Secretary to the Treasury, in response to an IFS analysis of raising the income tax personal allowance, said:

"This IFS analysis undermines many of the claims Ministers have made about how progressive it is to increase the personal allowance.

"At a time when families are being squeezed hard and the economy has stalled an increase in the personal allowance is better than doing nothing. But a temporary VAT cut would help pensioners and others on low incomes who don't pay income tax and, as the IFS notes, it would be a more effective boost to the economy.

"Ministers talk about lifting the low paid out of tax and helping work pay, but their actions are doing the opposite. Unfair and perverse changes to tax credits next month will mean a couple with children on the minimum wage working 16 hours per week will be better off quitting work. Changes to the personal allowance will do nothing to help these families.

"David Cameron and George Osborne seem to be more focused on wrangling about whether to cut the 50p top rate of tax for the richest one per cent, than helping people on low and middle incomes or coming up with a plan for jobs and growth."