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| Income tax revenue could be lower than expected, finance watchdog says | Income tax revenue could be lower than expected, finance watchdog says |
| (about 9 hours later) | |
| Income tax revenues are likely to be lower than expected despite rising numbers of people in work, the public finances watchdog has warned. | |
| Robert Chote, head of the Office for Budget Responsibility, said the expected shortfall was due to the numbers going into relatively low-paid work. | |
| “From the perspective of the public finances, that’s not particularly good news,” he told the BBC Radio 4 Today programme. | “From the perspective of the public finances, that’s not particularly good news,” he told the BBC Radio 4 Today programme. |
| “The chancellor of the exchequer gets more bang for his buck if wages and salaries rise as a result of people’s earnings going up than if employment goes up. | “The chancellor of the exchequer gets more bang for his buck if wages and salaries rise as a result of people’s earnings going up than if employment goes up. |
| “If earnings go up you are taking more people into higher income tax brackets whereas if employment is going up you are perhaps bringing in more people at the bottom. | “If earnings go up you are taking more people into higher income tax brackets whereas if employment is going up you are perhaps bringing in more people at the bottom. |
| “This continued story of earnings growing less rapidly than expected and employment growing more rapidly than expected does perhaps suggest that we’re more likely to be disappointed than to overachieve on income tax receipts this year.” | “This continued story of earnings growing less rapidly than expected and employment growing more rapidly than expected does perhaps suggest that we’re more likely to be disappointed than to overachieve on income tax receipts this year.” |
| George Osborne is on course to miss his deficit-cutting target this year, September borrowing figures show. Weak tax receipts pushed borrowing to £11.6bn in August excluding bank bailouts – £700m more than a year earlier according to the Office for National Statistics. | |
| The Treasury chief secretary, Danny Alexander, said the OBR figures were, in part, a reflection of the numbers of young people entering the workforce. | The Treasury chief secretary, Danny Alexander, said the OBR figures were, in part, a reflection of the numbers of young people entering the workforce. |
| “One of the things we are seeing in the UK is a very large fall in youth unemployment,” he told the Today programme. | “One of the things we are seeing in the UK is a very large fall in youth unemployment,” he told the Today programme. |
| “Young people at the start of their careers tend to earn significantly below the median income. That doesn’t mean that those are low-quality jobs. | “Young people at the start of their careers tend to earn significantly below the median income. That doesn’t mean that those are low-quality jobs. |
| “It does mean that those are people who are able to start out in life in the workplace, which is something that is hugely important.” | “It does mean that those are people who are able to start out in life in the workplace, which is something that is hugely important.” |