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Keeping up or falling behind?: the impact of benefit and tax uprating on incomes and poverty

Sutherland, Holly and Hancock, Ruth and Hills, John and Zantomio, Francesca (2008) Keeping up or falling behind?: the impact of benefit and tax uprating on incomes and poverty. Fiscal Studies, 29 (4). pp. 467-498. ISSN 0143-5671

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Identification Number: 10.1111/j.1475-5890.2008.00082.x

Abstract

Each year, the government decides how much to raise benefits and tax allowances. In the UK, the basis for these upratings is rarely debated, yet has major long-term consequences for the relative living standards of different groups as well as for the public finances. This paper considers the medium-term implications of present uprating policies, which vary across parameters of the tax–benefit system. Continuing these policies for 20 years, other things staying the same, would result in a near doubling of the child poverty rate alongside a substantial gain to the public finances. At the same time, pensioners are largely protected by the earnings indexation of pensioner benefits including, in time, the basic state pension. We show how difficult it will be to meet the UK child poverty targets unless the greater inequality inherent in the current regime for uprating payments and allowances is redressed.

Item Type: Article
Official URL: http://onlinelibrary.wiley.com/journal/10.1111/(IS...
Additional Information: © 2008 The Authors and Institute for Fiscal Studies
Subjects: H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HJ Public Finance
JEL classification: D - Microeconomics > D1 - Household Behavior and Family Economics > D13 - Household Production and Intrahousehold Allocation
I - Health, Education, and Welfare > I3 - Welfare and Poverty > I38 - Government Policy; Provision and Effects of Welfare Programs
Sets: Departments > Social Policy
Research centres and groups > Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD)
Research centres and groups > Centre for Analysis of Social Exclusion (CASE)
Date Deposited: 10 Jan 2011 15:52
Last Modified: 06 Mar 2013 11:26
URI: http://eprints.lse.ac.uk/id/eprint/31323

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