Launching a poster on this subject the Shadow Chancellor Ed Balls said: "The whole country will today see whose side this Conservative-led government is really on and who is paying the price for their total economic failure. David Cameron and George Osborne are today giving millionaires an average tax cut of £100,000 while they make millions of pensioners and working people on middle and low incomes worse off. It’s the wrong choice, it’s unfair and it’s totally out of touch with people on modest incomes struggling with the rising cost of living. Families will be an average of £891 worse off this year because of changes introduced since 2010, while a one earner family with children will be a staggering £4,000 worse off on average. And this is on top of the income squeeze we have seen over the last three years as a flatlining economy has seen prices rise faster than wages and unemployment rise again last month. These figures show the full picture David Cameron and George Osborne do not want you to see. They reveal that any gains Ministers boast about from the rise in the personal allowance are swamped by higher VAT, cuts to tax credits and child benefit. People in work, people looking for work, stay at home mums and pensioners hit by the granny tax are all being squeezed like never before. Millions are paying more while millionaires pay less."
However Labour's poster suggests, as does Ed Balls, that all millionaires will be getting a tax cut because of the government's tax changes, this simply isn't true. As the top rate of income tax is by definition on income and not on assets. So a person with a house worth over one million pounds, is an asset millionaire like say Labour leader Ed Miliband is but he will not be getting a tax cut as his income isn't high enough for him to benefit. The minimum salary to pay the new forty five pence is £150,000. None of the three party leaders will benefit from this change as David Cameron is paid £145,000. for being Prime Minister. Nick Clegg is paid as Deputy Prime Minister £134,565. And Ed Miliband is paid £132,387. for being Leader of the Opposition.
The second tax change is the raising of the lower rate tax threshold to £9,440 which means as many as twenty million people are around six hundred pounds better off according to the Lib Dems, who's policy it is to raise the threshold and their coalition partners the Conservatives. The Lib Dem Leader and Deputy Prime Minister Nick Clegg said: "Millions of working people across Britain are paying less income tax Liberal Democrats have made sure that people like you will be paying six hundred pounds a year less in income tax than they were under Labour thats fifty pounds a month not going to the taxman but going towards the things you need, helping with bills, paying for essentials. If you work full time on the minimum wage your income tax bill will be halved and if your one of the two million people on the lowest paid jobs you will no longer pay any income tax at all. We all know times are tough and costs keep going up that is why my priority, the Liberal Democrat priority, is to cut taxes for working people like you."
The Liberal Democrats have also unveiled a poster on this subject today as have the Conservatives although many Lib Dems are furious that the Conservatives are trying to take the credit for this change. As the Lib Dem poster shows the pledge to raise the threshold was on the front of the Lib Dem manifesto and it is simply disingenuous for the Tories to suggest it is happening because of them, as the only tax change promised in the Conservative 2010 manifesto was to raise the threshold for inheritance tax to one million pounds, the pledge George Osborne made in 2007 that frightened Gordon Brown out of call a snap general election.
The Labour party say their analysis of figures published by the independent Institute for Fiscal Studies (IFS), a one earner family with children will lose an average of £4,000 in the new financial year starting today because of tax rises and cuts to tax credits and benefits introduced since 2010. Taking into account all changes to tax, tax credits and benefits that have been introduced since 2010, households in the UK will on average be £891 a year, or £17 a week, worse off in the 2013/14 financial year. A breakdown of the figures shows different family types are affected in different ways. For example, a two-earner couple with children are losing an average of £1,869, a single parent in work £1,226, and a two earner couple with no children £672.
The analysis is based on figures published by the IFS in its Green Budget in February and its post Budget briefing last month.
