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The Government's decision on 13 May 2008 to increase the personal income tax allowance by £600 and to reduce the effective upper rate threshold by the same amount for 2008-09 is estimated to cost £2.7 billion (just under 0.2% of national income). The Chancellor, Alistair Darling, told the House of Commons: "I am able to finance this proposal through borrowing this year, ensuring that we do not take money out of the economy at this time."
The Government maintains that the tax cut:
- is affordable within the constraints laid down by its fiscal rules; and
- will provide a useful stimulus to the economy at a time when economic growth is slowing.
This note briefly assesses these claims.
Authors
Deputy Director
Carl, a Deputy Director, is an editor of the IFS Green Budget, is expert on the UK pension system and sits on the Social Security Advisory Committee.
Robert Chote
Report details
- DOI
- 10.1920/bn.ifs.2008.0078
- Publisher
- IFS
Suggested citation
Chote, R and Emmerson, C. (2008). Alistair Darling's mini-Budget: can he afford it?. London: IFS. Available at: https://ifs.org.uk/publications/alistair-darlings-mini-budget-can-he-afford-it (accessed: 29 March 2024).
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