This is a tax policy.

This is the rate that you start paying income tax. The model uses the lowest possible band, with a tax allowance of £1520 above the individual tax allowance and a tax level of 10%. The next tax band will be the basic rate.

If you decreased the "Reduced Rate of Income Tax" - in percentage terms - then this would reduce the tax burden of the household, and increase the level of household disposable income, so reducing a cause of child poverty.

Disclaimer Statement

Note the following is a very broad statement that has been used for educational purposes. The actual relationship may not hold due to the complexities of the issues. Therefore, it should not be taken literally.

The problems with this policy stem from concerns on the wider implications.

• If the level is reduced then the government will receive less tax income. This may increase the pressure on the government budget and result in either an increase in tax on another area or a reduction in the level of government spending.

The reduced rate of income tax is set at 10% (10p in every pound after the tax allowance). The input parameters range between 2% and 20%

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