Why the budget is regressive rather than progressive (3)

As more and more study is made of the totality of the government’s measures to tackle the deficit – so, not just the tax and benefit changes in the budget, but also the likely impact of spending reductions – it becomes clearer and clearer that the poorest will suffer the most.

A piece in the “Observer” newspaper today looks at a study conducted by the Fabian Society in conjunction with Landman Economics. It finds that families in the lowest decile of incomes will face cuts equivalent to 21.7% of their household income  which means that they will be hit approximately six times harder than those in the highest decile. This is because poorer households benefit more from public spending.

The article states:

“According to the study the poorest 10% of households, earning under £14,200, will see a cut equivalent to more than one fifth of their income. By contrast the richest, those earning over £49,700, will suffer a cut of just 3.6%. The second poorest group in the country – households earning £14,200 to £16,900 – face cuts of 13.6%, with about 7% for those in the middle of the spectrum.”


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