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David Cameron proposed two tax cuts today, affecting savers and pensioners (and pensioners with an income from savers, who conceivably could benefit twice). As I write it is not entirely clear how many people could benefit, and by how much – not least because the Institute for Fiscal Studies, which is normally relied upon to produce authoritative figures, suffered a power cut this afternoon (maybe we are going back to the 1970s?). But this is what we know so far:
Pensioners
The Tories would raise age-related personal allowances for pensioners by £2,000. They say that this would benefit those aged between 65 and 74 with pension income and other earnings between £9,490 and £32,930.
According to the IFS, most pensioners in this category would gain £400 a year. Those near the top or the bottom of the scale would gain less.
Around 5 million pensioners would benefit. But Labour point out that 60% of pensioners do not pay any tax at all, so the gains would only go to those who were relatively well off.
Savers
The Tories would abolish the basic rate of tax on savings. The Tories say that there are around 18 million people who receive interest from savings who would benefit.
Given that the Tories say the tax cut would cost £2.6bn, this suggests an average saving of £144 a year. But this figure is almost certainly misleading because some people will have disproportionately large sums saved up. The Tories admit that some individuals could save as much as £7,200 from their tax cut, although they have not said how many.
Labour say that, according to Treasury figures, anyone with an income worth less than £30,000 a year will benefit by less than £5 a year.
- David Cameron
- Economic policy
- Tax and spending
- Tax
- Credit crunch
- Small business
- Banking
- Recession
- Banks and building societies
- Savings
- Income tax
- Public services policy
- Public finance
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