Lower income tax revenue predicted

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Published: Monday 13th October 2014 by The News Editor

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Income tax revenues are likely to come in lower than expected despite rising numbers of people in work, the official public finances watchdog has warned.

Robert Chote, the head of the Office for Budget Responsibility, said the expected shortfall was due to the numbers going into relatively low paid work.

“From the perspective of the public finances, that’s not particularly good news,” he told the BBC Radio 4 Today programme.

“The Chancellor of the Exchequer gets more bang for his buck if wages and salaries rise as a result of people’s earnings going up than if employment goes up.

“If earnings go up you are taking more people into higher income tax brackets whereas if employment is going up you are perhaps bringing in more people at the bottom.

“This continued story of earnings growing less rapidly than expected and employment growing more rapidly than expected does perhaps suggest that we’re more likely to be disappointed than to over-achieve on income tax receipts this year.”

Published: Monday 13th October 2014 by The News Editor

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