Many people were interested in how progressive the Emergency Budget in June 2010 was. IFS was able to provide an analysis of this because we maintain a detailed tax and benefit simulator (TAXBEN), which has been developed over the years using the IFS’s core ESRC funding.

Some commentators asserted that the VAT reforms were regressive - favouring the rich over the poor - but our analysis showed that when the potential to borrow and save is taken into account, the increase in the standard rate of VAT was progressive. This finding received significant coverage (for instance on TV and on Radio 4), and was cited by the Government in defence of their proposals.

Our analysis also showed that, taken together, the tax and benefit changes announced in the Emergency Budget were regressive, not progressive as the coalition Government claimed.