"Dubbed "Worse off Wednesday", changes to personal taxes will shrink household income by £500m this year while welfare cuts remove a further £1.8bn, according to Capital Economics.
Coming on top of soaring inflation, the fiscal squeeze will have the effect of reducing real pay this month by 1.5pc.
Not everyone will be worse off. The personal tax allowance in being increased from £6,475 to £7,475, taking 880,000 people out of tax and gifting 23m basic rate taxpayers up to £170 each.
However, the cut is being paid for by an decrease in the higher rate threshold from £43,875 to £42,475, lifting 750,000 people into the 40p tax bracket, as well as a 1p rise in National Insurance.
Higher earners will be hit by a new stamp duty rate of 5pc on £1m properties and a reduction in pension tax relief from £255,000 to £50,000.
Welfare changes, such as switching to less generous inflation indexing, will cost those on benefits £2.7bn. Including January's VAT rise, everyone is worse off.
The squeeze comes on the back of the first official annual decline in household incomes since 1981 last year."
Tax does have to be taxing.
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