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IFS criticises main parties’ tax proposals

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The IFS published its analysis comparing the tax and benefit plans of the Conservatives, Labour and the Liberal Democrats on Tuesday, criticising what it called the ‘little sense of direction in tax and benefit proposals’ ahead of next week’s general election. During the morning’s press briefing, researchers also presented the IFS’s analysis of manifesto commitments – the report, Taxes and benefits: the parties’ plans (see www.bit.ly/1GsLxyB), found ‘little evidence of any coherent strategy, and numerous proposals that would complicate the tax system’ for all three political parties.

‘With significant deficit reduction still to come, households can expect the tax and benefit changes implemented over the next parliament to reduce their incomes, on average,’ the IFS warned in a statement. ‘There are large differences between the Conservatives, Labour and the Liberal Democrats in how they propose to do this. But they share a lack of willingness to be clear about the details, and an inability to resist the urge for piecemeal changes which would make the overall system less efficient and coherent.’

According to the research, the Conservatives propose small net cuts to taxes and large cuts to benefits; Labour propose a rise in taxes and little change to benefits spending; the Liberal Democrats are in both respects somewhere in between. All these parties seem to have a desire to raise tax revenue in vaguely-defined, opaque and apparently painless ways. In many cases the proposals would lead to unnecessary increases in complexity and inefficiency in the tax system.

James Browne, a senior research economist at the IFS and one of the report’s authors, said: ‘We have seen little coherent reform to the tax system for many years and the parties’ manifestos promise little going forward. Damage has been done, and more is being proposed, to pension taxation, while proposals on the taxation of housing lack coherence. There is a limit to the extent that we can continue to pretend that tax revenues can rise while protecting the vast majority of people. Just because a tax rise hits ‘the rich’ or is labelled "anti-avoidance" does not necessarily mean it is harmless.’

Issue: 1260
Categories: News
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