Will raising the tax threshold reduce UK poverty?

The Coalition government risks repeating the mistakes of the previous Labour government by focusing too much on tax and benefit incentives as the only solution to poverty, argues a budget briefing from the Joseph Rowntree Foundation, What will Budget 2012 Mean for UK Poverty? The briefing also argues that while, taken in isolation, the impact of the Coalition government’s aim to raise the tax threshold to £10,000 could help those on low incomes, it must be seen in the context of overall tax and benefit changes.

The briefing notes that for families with children the raising of the income tax threshold by £1,000 in April 2011 more than outweighed the gains created by freezing child benefit, reducing tax credits and reducing child care reimbursement.

The briefing draws on evidence from the organisation’s previous research to show how potential policy decisions in the Budget would affect poor places and people in the UK.

The report examines six issues in detail:

  • the impact of raising the income tax threshold
  • the relationship between tax credits, work incentives and poverty
  • the proposed ‘mansion tax’, council tax and stamp duty
  • the impact of current housing shortages and increasing housing supply
  • options for helping the elderly
  • funding social care.

The briefing is on the Joseph Rowntree Foundation website.