Taxes and benefits

"There aren’t many upsides to the current situation", write Stuart Adam and Helen Miller. "Using it as an opportunity to fix some bits of our tax system could be a silver lining."

On Tuesday (12 May 2020) the Chancellor, Rishi Sunak, announced an extension to the Coronavirus Job Retention Scheme (CJRS), which covers 80% of employees’ usual salaries, up to a cap of £2,500 a month, while they are furloughed.

On the eve of the economic crisis caused by the public health response to coronavirus, around 76,000 working-age families were subject to the benefit cap. The cap means that most of these families, and some of those who have since lost employment during the crisis won’t benefit at all from the temporary increases in benefits announced by the Chancellor. The cap provides a strong financial incentive for families to move into paid work or to move to cheaper housing; but this is less important, and in many cases undesirable, at the present time. Raising or removing the cap so that all working age benefit recipients can benefit from the temporary increase in support would make sense, at least while the current social distancing requirements are in place.

The coronavirus pandemic is a public health crisis and global economic shock increasingly affecting lower-income countries around the world – external finance from international institutions and development partners can help plug financing gaps, but may become stretched as many countries around the world seek assistance.

The coronavirus pandemic is first and foremost a public health crisis. But it also represents a large and systemic economic shock, with massive effects on both the supply and demand sides of the economy.

This presentation was delivered as part of the IFS press briefing following the Spring Budget 2020.

"If we want more spending, we’ll have to pay for it. That, eventually, must mean more taxes." Paul Johnson surveys Rishi Sunak's choices ahead of the 2020 Budget.

I see nothing objectionable in fixing a limit to what anyone may acquire by mere favour of others, without any exercise of his faculties, and in requiring that if he desires any further accession of fortune, he shall work for it.” That, from John Stuart Mill, alongside his conviction that great economic and social advantages would result from a reduction in the number of “enormous fortunes which no one needs for any personal purpose but ostentation or improper power”, has for more than a century been the central liberal case for a substantial and effective inheritance tax.

Last week the Royal Statistical Society announced its statistic of the year. And we at the Institute for Fiscal Studies won. We won for 58 per cent. That’s the proportion of people in poverty in Britain who live in households that contain someone in paid work.

The three main political parties offer voters starkly different choices on tax, writes Stuart Adam of the IFS.