Increased income tax for highest earners 'would not help poor'

An increase in the income tax band paid by the nation's top earners would not provide a significant amount of money to help the poor, according to research produced by the Institute for Fiscal Studies (IFS) reported in Accountancy Magazine.

The IFS analysed evidence from the last 40 years and found that the treasury would gain "little if any extra revenue to transfer to the less well off" from changing the tax rates, the magazine quoted.

Incentives to work for those on benefits should be improved by changing tax rates for the lower earners, the study found.

Robert Chote, IFS director, said that these kinds of tax cuts would need to be paid for by "the bulk of the population" because an insufficient amount of tax to finance these changes would be raised by "increasing tax rates for the highest earners alone," Accountancy Magazine reported.

The government has recently come under fire for abolishing the ten per cent starting rate of income tax.

This is because it could cost some of the lowest earners up to £232 a year.

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