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In the News

Perspectives on the 2021 Budget

Graham Watson

4th March 2021

One important aspect of the 2021 budget was Sunak's decision to freeze (from April 2022) income-tax thresholds.

In fixing the thresholds, the Chancellor has ensured that the tax take is going to increase as people earn more and enter the higher tax band and so on. If wages continue to increase, people will automatically pay more in tax. It's a cunning ruse designed to generate more tax revenue without people 'noticing' - so you have to admire the Chancellor for that; however, when tax thresholds were fixed, even for a single year in the early 1980s, it caused uproar.

More here

This analysis from the Guardian looks at the effect of the Budget on various types of households - singletons, couples, pensioners and so on, with varying incomes.

Last night's Newsnight analysis of the Budget - back to the 1960s in terms of government borrowing - as a result of coronavirus spending - and the tax burden rising to a level last seen in the 1960s - Well worth watching!

The Joseph Rowntree Foundation and the Resolution Foundation have combined to stress the fact that yesterday's Budget will worsen inequality. The temporary nature of the uplift to Universal Credit, and the fact that it will be cut in six months time, mean that it might be the case that another 500,000 people fall into poverty, including 200,000 children.

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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