1.6 million Britons to pay higher income tax rate
London, England, United Kingdom (AHN) – A study released Monday by the British think tank Institute for Fiscal Studies said that more Britons will pay higher income tax rates.
With these changes, effective tax rates for middle-income Britons could reach 83 percent, the IFS estimated. It is the same tax rate for Britain’s top earners which the Labour government imposed in 1979.
Beginning April, 750,000 Britons will pay 40 percent higher income taxes because of reforms initiated by the coalition government. Under the changes, the level which residents will begin paying income taxes will be increased by $1,500 (GBP 1,000) to $11,212.50 (GBP 7,475) a year.
But tax credit reductions will make the marginal rates of 175,000 working parents reach 70 percent. Hardest hit would be a worker who earns $67,500 (GBP 45,000) and with a non-working spouse and two children. This worker will be worse off by $1,500 (GBP 1,000), the think tank pointed out.
That would be on top of higher National Insurance premiums and value added tax.
By 2014, another 850,000 Britons will pay higher tax rates that when the next general election takes place, the number of higher-rate taxpayers would hit five million.
The coalition government, however, continued to justify the changes, claiming those who have the capacity to pay higher taxes carry the greatest burden. A Treasury spokesman added tax credits will be enjoyed by residents who need them most. The changes also moved almost one million taxpayers out of paying taxes, while 23 million taxpayers in the basic rate bracket will even gain $255 (GBP 170) a year, the spokesman said.
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