Tory claim on tax rise rubbished

The Conservative Party’s claim that under Labour there would be a tax rise for every working household has been slated by the respected think tank, the Institute for Fiscal Studies (IFS).

The £3,028 tax rise touted by the Tories assumes that Labour would increase taxes on working households by £7.5 billion in 2016–17 and £15 billion from 2017–18 onwards, with the £3,028 being the average tax rise cumulated over all years through to 2019–20, the IFS said.

The first point to note is that, on the basis of these figures, you get to an average £3,000 tax increase by cumulating increases over four years — this is the average additional bill in total over four years, it is not an annual additional cost — and by dividing the total tax increase only by the number of working households not by the total number of households.

In a world in which taxes were to rise by £15 billion one would usually describe this as leaving households worse off by £560 a year — £15 billion divided by 26.7 million households, the IFS said.

Cumulating numbers like this over several years is, at best, unhelpful. Ignoring the existence of non-working households doesn’t help provide sensible averages either, according to the IFS.

www.ifs.org.uk/publications/7678