When changes to the tax laws come into effect tomorrow, it will be millions of low income families and older people who suffer the consequences whilst top earners are going to realise breaks that will save them millions. According to Ian Cowie reporting for The Telegraph, poor families will now be even poorer by more than £500 per year as will pensioners who are lucky enough to have meager savings.
These new ‘tax credits’ will mean that the bottom earners will need to pay higher tax rates once they have reached the threshold which is currently set at £7,475 annually. According to Cowie, these people would only be bringing home about 30p on every £1 they earn above that figure. That is criminal in his eyes as that is being taxed at a rate much, much higher than the top earners are assessed.
Consider the fact that deductions from these earnings are 39%. Then there is 11% plus an additional 20%. That totals 70pc on everything above the £7,475 or 70p on the pound. It doesn’t pay to work if you fall within this bracket as HMRC will literally eat up most of your money whilst the top earners have loopholes and avoidances that are not open to those stuck in poverty.
Reform is surely needed and the electorate will find that this inequality in the tax system has been allowed to go on for too long. In his final words in the column, Cowie states that reform is indeed on its way through the coalition government which allows millionaires to benefit whilst low earners and pensioners living on savings are still awaiting allowances promised to them.
The current Chancellor is known to be amongst the top earners and of course looking for those tax breaks within that income bracket – but what of those on the low end of the scale? When will government realise the injustice of this inequality? That is the question Cowie leaves his readers with.