"Incomes to fall WHOEVER wins the election"

[dutchman]

Average incomes are set to fall over the next five years whoever wins the election, the Institute for Fiscal Studies said this morning.



After studying the parties' manifestos the economic think-tank said the Tories would reduce taxes –but also cut benefits. It said child benefit, tax credits and disability benefits were in danger.

Labour, however, would protect benefits but increase taxes to pay for it – hitting rich families in £3million homes with an annual £16,000 mansion tax bill.

Incomes would also be hit by the Liberal Democrats – who would cut the benefits bill more than Labour but also increase taxes more than the Tories.

The IFS said: '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.

'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.'

Looking in detail at the party plans, the promise from both the Tories and Lib Dems to increase the personal allowance to £12,500 is of 'most value to those in the middle and upper-middle of the income distribution'.

The IFS said 44 per cent of adults already earned too little to pay income tax, while two-earner households would gain most of all.

Labour's proposed tax cut, via a new 10p starter rate, is criticised as lacking 'any economic justification' as it 'would be worth only 50p a week to most taxpayers'.

The think-tank reached this conclusion on the basis of the Labour pledge to fund the starter rate by scrapping the marriage tax allowance.

It said: 'Virtually identical effects could be achieved by simply raising the personal allowance.'

The IFS added: 'None of the parties is suggesting sorting out real problems in the income tax system.'