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Fiscal Drag - One in five workers will be higher-rate taxpayers by 2027

17th May 2023

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The latest IFS peek under the bonnet of the tax system has revealed the 'hidden' effects of fixing freezing tax thresholds and personal allowances. As a result of this, by 2027, 20% of the population will be higher rate taxpayers and paying the 40% tax rate.

Such a phenomenon is called fiscal drag - and is an effective way of increasing the tax take, in this case, it is argued that this is the best way to 'repair' the public finances.

It represents a remarkable change: in 1991-92, 3.5% of all adults were higher rate taxpayers. By 2027-28, it will be nearly 15%.

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Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to tutor2u, reads voraciously and is interested in all aspects of Teaching and Learning.

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Fiscal Drag - One in five workers will be higher-rate taxpayers by 2027

Graham Watson

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