UK Tax Cuts Would Benefit Wealthy Households Most, IPPR Says


A UK income tax cut would mainly benefit wealthy households and do little to address the growing cost of living crisis, according to new research that casts doubts on the ambitions of the contenders to lead the ruling party and nation.

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(Bloomberg) — A UK income tax cut would mainly benefit wealthy households and do little to address the growing cost of living crisis, according to new research that casts doubts on the ambitions of the contenders to lead the ruling party and nation.

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The Institute for Public Policy Research said reducing the basic rate of tax by 1 percentage point to 19% would give $74 more a year to people earning £20,000. That’s £300 less than those earning £50,000.

Tax cuts are dominating the political debate in the race to replace Boris Johnson as prime minister. A number of the contestants have made immediate reductions a key part of their pitch, billing them as way of helping British voters cope with soaring inflation and energy bills.

Read More: UK PM Hopefuls Tout Billions in Tax Cuts: Who’s Promising What?

In total, a 1p tax cut would cost the Treasury more than £5 billion, the IPPR estimated. Half of that would benefit the richest fifth of households, and only £137 million the lowest.

“Tax cuts are an incredibly inefficient way of getting money to those who need it most,” Henry Parkes, IPPR senior economist, said Thursday. “It would be much more effective to provide a higher level of targeted support towards those on the lowest incomes.” 



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