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Be careful about cutting those tax credits (Telegraph and Spectator)

    Rupert Darwall's research for the CPS on tax credits in 2006 was cited by Fraser Nelson in his review of the Chancellor's Autumn Statement.

    Mr Nelson argues in his columns in the Spectator and the Daily Telegraph that bold tax cuts in Sweden and Estonia should provide a model for the coalition - as Rupert Darwall argued in his pamphlet for the CPS six years ago, 'A better way to help the low paid'.

    Writes Mr Nelson:

    "4) Be careful about cutting those tax credits World over, people are proving more sensitive than you might think to work incentives. The Swedish tax cut that I’m so fond of citing was transferred via an Earned Income Tax Credit. It made then 8pc net better off a year, allowing the government to say “You now get the equivalent of an extra month’s salary every year”. A message strong enough to have the Conservatives re-elected for the first time in Swedish history. My colleagues at the CPS spotted the potential of this in 2006 (pdf)."

    To read the full articles, visit the Spectator website and the Telegraph website.

    Date added: Friday 7th December 2012