Oh dear. It looks as though Alistair Darling’s 10p tax con is going to come back to haunt him – and in a major way. As the IFS points out this morning, the fact that he’s only increased personal tax allowances for a year – a short-term fix to compensate for the abolition of the 10p tax rate – means that he’s “not only created millions of winners this year: he has created millions of potential losers next year”. That’s some 18 million potential losers next year – hardly the electorate that the Government wants, with a general election on the horizon.
So, is there any way the Treasury can avoid this? Well, yes. It could keep the tax breaks in place. But, to do that, it would have to find an extra £3 billion a year, at a time when the public finances are already taxed and borrowed to the hilt.
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