Average earners hit hardest by taxes

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Britons earning an average income have been hit harder by tax increases over the past ten years than any other demographic group, it has emerged.

The Centre for Policy Studies has published a new analysis of the impact of changes to the tax system since 1997.

Historically, report author Charlie Elphicke notes that average families have been among the best equipped to meet the financial challenges posed by higher taxes.

But since 2002 this has ceased to be the case, with the average family now £950 worse off in terms of disposable income.

Some of the reasons suggested for why this may be the case include "significant increases" in the cost of property and a poor rate of wage inflation.

As a result, households weekly income has remained "broadly flat" in recent years while elevated taxes have hit the typical family particularly hard.

Compared with the wider population, Mr Elphicke writes that "a couple on median average income has even less disposable income after tax and housing costs".

In particular, he observes that such families would have seen a 21 per cent increase in disposable income - equivalent to £3,600 - in the five years to 2002.

But by 2006 this had developed into a £950 deficit, or a fall of about six per cent in income.

Meanwhile, director of the centre Jill Kirby recently wrote that the proposal to introduce ID cards by the government is akin to an enforced Tesco Clubcard scheme.

"Customers have the choice to shop elsewhere; they also have the choice of shopping at Tesco whilst declining to sign up for a card," she comments.

But she adds that no such opt-out capability would exist in an ID card scheme, saying: "The Tesco model cannot be imposed on users of a monopoly service provider."

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