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George Osborne's Budget tax raid on landlords is 'plain wrong', IFS warns
The Institute for Fiscal Studies criticises the Chancellor's move to cut the income tax relief enjoyed by landlords
Britain's Chancellor of the Exchequer, George Osborne, holds up his Budget box for the cameras as he stands outside Number 11 Downing Street Photo: REUTERS
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By Steven Swinford, Deputy Political Editor
1:43PM BST 09 Jul 2015
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George Osborne's raid on buy-to-let landlords is "plain wrong" because they are already taxed more heavily than homeowners who live in their properties, the Institute for Fiscal Studies has warned.
Mr Osborne said the income tax relief enjoyed by landlords will be cut to the basic rate, which currently stands at 20pc. The measure, which will address "unfairnesses in property taxation", will be phased in "gradually" from 2017.
However the Institute for Fiscal Studies said that his "line of argument" is incorrect and that the more fundamental problem lies with the lack of housing.
The IFS said that public sector pay will fall below "anything
we've seen" compared to the private sector after Mr Osborne froze pay rises at 1 per cent a year. "We are entering a new and much tougher phase," Paul Johnson, the head of the IFS said.
He said that the government's decision to protect defence spending will see deeper cuts in other unprotected departments, which will have seen their budgets fall by a third by the end of the decade. There will be £19billion worth of cuts over the next four years.
The IFS said that while Mr Osborne's budget will lead to the "lower welfare country he promised", his claim that Britain is a "lower tax country" is "not quite as consistent".
It said that while Mr Osborne has announced £8billion worth of tax cuts, other taxes will rise by £14billion.
The IFS allow warned against the government's plans to overhaul pensions tax relief after a consultation. "Recent changes have not augured well for sensible decision making," Mr Johnson said.
The IFS said that the government's £6billion with of cuts to tax credits will leave people worse off, despite the introduction it the national living wage.
"The key fact is that the increase in the minimum wage simply cannot provide full compensation for the majority of losses experienced by tax credit recipients," he said. "That is arithmetically impossible."
It said that overall the scale of the welfare cuts means that the Budget was "regressive" because it took "more from poorer households than richer ones."
The Institute for Fiscal Studies criticises the Chancellor's move to cut the income tax relief enjoyed by landlords
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Britain's Chancellor of the Exchequer, George Osborne, holds up his Budget box for the cameras as he stands outside Number 11 Downing Street Photo: REUTERS Which countries benefit from lower oil prices? Find out how the repercussions of the falling price of oil are felt in every corner of the wider economySponsored by Alliance Trust
By Steven Swinford, Deputy Political Editor
1:43PM BST 09 Jul 2015
Follow
84 Comments George Osborne's raid on buy-to-let landlords is "plain wrong" because they are already taxed more heavily than homeowners who live in their properties, the Institute for Fiscal Studies has warned.
Mr Osborne said the income tax relief enjoyed by landlords will be cut to the basic rate, which currently stands at 20pc. The measure, which will address "unfairnesses in property taxation", will be phased in "gradually" from 2017.
However the Institute for Fiscal Studies said that his "line of argument" is incorrect and that the more fundamental problem lies with the lack of housing.
The IFS said that public sector pay will fall below "anything
we've seen" compared to the private sector after Mr Osborne froze pay rises at 1 per cent a year. "We are entering a new and much tougher phase," Paul Johnson, the head of the IFS said.
He said that the government's decision to protect defence spending will see deeper cuts in other unprotected departments, which will have seen their budgets fall by a third by the end of the decade. There will be £19billion worth of cuts over the next four years.
The IFS said that while Mr Osborne's budget will lead to the "lower welfare country he promised", his claim that Britain is a "lower tax country" is "not quite as consistent".
It said that while Mr Osborne has announced £8billion worth of tax cuts, other taxes will rise by £14billion.
The IFS allow warned against the government's plans to overhaul pensions tax relief after a consultation. "Recent changes have not augured well for sensible decision making," Mr Johnson said.
The IFS said that the government's £6billion with of cuts to tax credits will leave people worse off, despite the introduction it the national living wage.
"The key fact is that the increase in the minimum wage simply cannot provide full compensation for the majority of losses experienced by tax credit recipients," he said. "That is arithmetically impossible."
It said that overall the scale of the welfare cuts means that the Budget was "regressive" because it took "more from poorer households than richer ones."