The budget: neither fair nor effective

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The budget: neither fair nor effective

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A fudged budget: the higher personal allowance, instigated by the Lib Dems, fails two key tests

This week’s budget contained few surprises. Least surprising of all was the announcement of a further rise in the income tax threshold for working-age people. From next April, the personal allowance rises to £9,205, generating a tax cut of £220 for all basic rate taxpayers earning more than the current allowance of £8,105. The Liberal Democrats have lobbied hard for this move as part of their “fairness” agenda, arguing that the higher allowance lifts 840,000 low earners out of income tax altogether. At the other end of the scale, part of the gains for higher rate taxpayers have been restricted, which helps to offset the cost.

Nevertheless, this remains an expensive measure, at £3.3 billion next year. Any tax cut spread across 24 million taxpayers will be expensive if it is to have a

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