views

Tories claim a doubling of low income families facing 90 per cent tax rates

THE number of low-income families facing marginal tax rates of more than 90 per cent has doubled in the recession and is set to rise further, the Conservatives claimed yesterday.

The Government had buried figures in its Pre-Budget Report last week showing that 70,000 low income families are facing the marginal tax rates, more than double the total of 30,000 at the start of the downturn, the Tories said.

A 90 per cent marginal tax rate means that for each extra £1 someone earns, they get to keep only 10p, losing the rest to increased taxes or lower benefits.

Shadow Chancellor George Osborne said: “It’s the many, not the few who are suffering under Labour.

“Now thousands more families are going to be caught in the poverty trap.”

The Conservatives also claimed marginal tax rates of 80 per cent or would affect more than half a million families, a rise of 45,000 families compared to the tax and benefit regime in place in 2009-10.

The Conservatives said overall the number of families paying marginal tax rates of 60 per cent or more has risen by over a million under Labour,

Ministers say the tax credit system is supporting people’s incomes through the downturn.

“Since 1997, the number of families facing marginal deductions rates of more than 70 per cent has more than halved,” a Treasury spokesman said.