Labour

The independent Institute for Fiscal Studies has said that the Conservatives would need to take tax credits away from households with incomes of £31,000 to raise the money that the Conservatives have promised.

"At its 2009 party conference, the Conservative Party proposed to start the withdrawal of the family element of the child tax credit at an annual family income of £40,000, rather than the current threshold of £50,000. An early estimate of the savings from this reform was produced by researchers at IFS and cited by the Conservative Party, and this was that the change could save £0.4 billion a year. However, the government has estimated that the threshold would have to be cut by more – to £31,000 a year – in order to save £0.4 billion. “It is likely that the estimate from the government is more accurate, because the IFS estimate assumed full take-up of the child tax credit. Without access to HMRC’s data, it is not possible for us to say precisely how much money would be raised by the Conservative Party’s proposal having allowed for incomplete take-up, but it can be stated confidently that it would be less than £0.4 billion (because that would require lowering the threshold to £31,000), but more than £45 million (which is what would be raised if the threshold at £50,000 were replaced by a cliff-edge, as this is the total amount to which families with incomes exceeding £50,000 are entitled)."

Institute for Fiscal Studies
The IFS Green Budget, 3 February 2010, p. 168

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