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The graph that shows Tory lies on tax



The poorest are the hardest hit by the Tories’ budget.

The above graph shows that it will hit the poorest 10 percent worst. Note that the graph does not include the impact of the cut to the 50 percent tax rate for the rich.

This is because, the Treasury says, “the behavioural response is so large that presenting a static analysis would not be representative of likely actual impacts”.

In other words, it is too difficult to work out how much a tax cut for people earning over £150,000 will save them, because they avoid so much tax as it is.

The sums assume, according to the OBR, “that the behavioural response to the 50 percent rate is more powerful than the original costings”.

Therefore, “the cut to 45 percent appears less expensive than it would have done under the original assumptions”.

In other words, it assumes that the rich will be more honest about paying 45 percent tax than they have been about 50 percent.

This is remarkable not just for its naivety but even on the government’s own figures.

The budget documents reveal the rich shifted more than £16 billion of income into a different tax year to avoid tax.

Further, the government admitted that 50p tax rate payers avoided more than £6 billion of tax on one income tax ruse alone.

That’s despite previously claiming all tax avoidance adds up to just £5 billion.


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Tue 27 Mar 2012, 17:53 BST
Issue No. 2296
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