The government needs to reduce income tax if it is to help spark a revival in consumer finances, one advisory website has stated.
According to Fool.co.uk, many banks will not pass on the 0.5 per cent cut in the base rate announced by the Bank of England’s monetary policy committee (MPC) yesterday, meaning mortgage borrowers are unlikely to benefit from the move.
In addition to this, those suffering with credit card debt are also unlikely to see their situation improve, as interest on such products is approximately ten times greater than the base rate.
David Kuo of the website said that the government needs to implement “plan b” and reduce taxation.
“Cutting taxes will have a more direct and immediate effect on household budgets,” he explained, adding that Labour should not be relying on rate cuts alone in order to stimulate the economy.
The cut by the MPC has brought the base rate down to 1.5 per cent, the lowest it has been in the Bank’s 315-year history.
By Tom Musk