According to research by the House of Commons Library, an estimated 1.3 million people in the UK will be hit with a 'stealth tax' that will cost them £285 a year if the chancellor maintains a freeze on income tax thresholds.
The Liberal Democrats are highlighting the issue, arguing that as wages rise with inflation, more workers will be pushed into higher tax brackets, a phenomenon known as 'fiscal drag.' The freeze on thresholds means that a greater portion of people's earnings will be subject to taxation, effectively acting as a hidden tax increase.
The Liberal Democrats' analysis suggests that this measure disproportionately affects lower and middle-income earners, who are already struggling with the rising cost of living.
The proposed tax increase comes at a time when many families are facing financial pressure, making the additional £285 a year a significant burden.
The findings reveal the potential for the government to raise revenue without a formal tax rate increase, but at the expense of household budgets.
The Liberal Democrats are calling on the chancellor to reverse the freeze to provide relief to millions of workers.
The debate over income tax thresholds is part of a broader discussion about fiscal policy and the government's approach to managing the economy amidst inflation.
The research provides a clear financial impact, demonstrating how a seemingly small policy decision can have a substantial effect on the everyday lives of workers.
The Liberal Democrats are highlighting the issue, arguing that as wages rise with inflation, more workers will be pushed into higher tax brackets, a phenomenon known as 'fiscal drag.' The freeze on thresholds means that a greater portion of people's earnings will be subject to taxation, effectively acting as a hidden tax increase.
The Liberal Democrats' analysis suggests that this measure disproportionately affects lower and middle-income earners, who are already struggling with the rising cost of living.
The proposed tax increase comes at a time when many families are facing financial pressure, making the additional £285 a year a significant burden.
The findings reveal the potential for the government to raise revenue without a formal tax rate increase, but at the expense of household budgets.
The Liberal Democrats are calling on the chancellor to reverse the freeze to provide relief to millions of workers.
The debate over income tax thresholds is part of a broader discussion about fiscal policy and the government's approach to managing the economy amidst inflation.
The research provides a clear financial impact, demonstrating how a seemingly small policy decision can have a substantial effect on the everyday lives of workers.