IEA Economics Fellow Julian Jessop has been quoted in The Daily Telegraph discussing ways that the government could tackle rising tax bills as a consequence of tax thresholds being frozen since 2020 – despite inflation.

Julian said:

“There are essentially two ways that the Chancellor could reverse the impact of the freeze on tax thresholds, at least in part.

“One, of course, would be to unfreeze the thresholds. Increasing the personal allowance by 10pc would cost the Treasury about £10bn. Increasing all main allowances, starting and basic rate limits by 10pc would cost around £15bn.

“The other way would be to lower other taxes instead. This was the approach taken in the Autumn Statement when the Chancellor cut NICs.

“An additional 2p cut in the basic rate of income tax would cost about £14bn and might generate some better headlines. However, this would help middle and higher earners more than those on lower incomes who lose most from freezing tax thresholds.”

Read the full article here.