Taxes on living need reform, not income tax

A think-tank has accused the government of forgetting about the middle classes in its bid to rid the poor of an income tax burden but while we argue about wage slips the real problem is being left unchecked.

Getting a few pounds extra in your pay packet each month is nothing to be sniffed at, and for arrogant to think it doesn't matter at all. However, I think the government has done a wonderful job of getting ministers and therefore the public to squabble over income tax and personal allowances to distract from the real concern: the cost of living.

Think-tank, the Institute of Economic Affairs, has warned Cameron and co that the middle classes risk being left behind holding a big tax bill in the government's bid to take the lowest paid out of income tax. The personal allowance is already rising to £10,000 next year and the coalition wants to push it to £10,500 while the threshold at which you pay 40% tax has come down meaning 1.3 million people a year are being caught in the net.

This has led to renewed rhetoric about the 'squeezed middle' and the burdened middle classes who are struggling to make ends meet. However, it isn't just the squeezed middle that are struggling, it's everyone. Unless you happen to be particularly wealthy there is a chance that you have had to cut back, seen household bills rise and worried about making the sums add up.

We all do this to varying extents but we all do it and we do it because the cost of living is increasing. The government is keen to give us a couple of vote-winning pounds extra in our wages but what it should really be doing is looking at ways to reduce the cost of living.

The average family needs cheaper food and fuel, gas and electricity bills that don't rise 10% in a year, and some sort of stability about their financial future that will allow them to budget and save.

Why doesn't the government cut VAT, reduce tax on fuel and stop allowing the energy companies to act as suppliers and distributors of gas and electric while setting their own prices?

All of these would reduce the financial burden of day-to-day living and would benefit people far more than playing round the edges of income tax. But of course the government is giving us pennies and looking after its own pounds.
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