Labour and Tory truths about tax

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The Independent Online
WITH the Government claiming this year's tax increases cost pounds 5.75 a week and Labour claiming pounds 10 a week, it is tempting to conclude that one or other is lying. In fact these are truthful answers to different questions, writes Robert Chote.

Labour's figure is the tax rise paid by a working couple on average annual earnings of about pounds 19,500. But 'average earnings' are boosted by a relatively small number of very well off people, so more than half the population is, in fact, on below-average earnings. The Tory figure is calculated from a spread of all households, some of which pay no tax.

'Labour's household is quite well off,' said Steven Webb, of the independent Institute for Fiscal Studies. Most pensioners, lone parents, unemployed, sick and disabled earn well below the average. 'Labour argues that pensioners and the poor matter, but ignores them when it calculates the effect of the Budget.'

However, considering the sort of voters for whom the parties are competing, Labour's household could prove the more influential.

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