The Model You are about to feel what it is like to be the chancellor of the exchequer, to run the nation's economy - or rather the Virtual Economy - as you think fit. To make any changes, use the drop-down menus - just select the value that is closest to what you want. When you are happy with your reforms, click the 'Run Model' button at the end. The results come out as figures and graphs - so if using a slow link you might want to turn off your images. If you are interested in further details, they can be found at the IFS. 1.Decide which of the variables you want to change: Income Tax Indirect Taxes National Insurance Benefits Budget constraints 2.Press the Run Model button. You can Reset the model and start again at any time.

Income Tax Allowances

Help on Allowances

	Personal Allowance (£ per year)	Restriction
Personal Allowance	02000300035004000433550006000
Age Allowance	030003500400045005000572058005900600065007000
Children's Tax Credit	010001500200025003000400041605000600010000	05101520Don't Restrict

Macroeconomic Variables

For subsequent years, uprate the tax system	by 20% less than inflationby 15% less than inflationby 10% less than inflationby 5% less than inflationby 2% less than inflationby 1% less than inflationIn Line With RPIby 1% above inflationby 2% above inflationby 5% above inflationby 10% above inflationby 15% above inflationby 20% above inflation
Base Rate	cut by 4 pointscut by 3 pointscut by 2 pointscut by 1 pointcut by half a pointcut by a quarter of a pointkeep unchangedincrease by a quarter pointincrease by half a pointincrease by 1 pointincrease by 2 pointsincrease by 3 pointsincrease by 4 pointsincrease by 5 pointsincrease by 6 points
Government capital spending	cut by 20%cut by 15%cut by 10%cut by 5%cut by 4%cut by 3%cut by 2%cut by 1%keep unchangedincrease by 1%increase by 2%increase by 3%increase by 4%increase by 5%increase by 10%increase by 15%increase by 20%
Government current spending (real terms, 1995 prices)	cut by 20%cut by 15%cut by 10%cut by 5%cut by 4%cut by 3%cut by 2%cut by 1%keep unchangedincrease by 1%increase by 2%increase by 3%increase by 4%increase by 5%increase by 10%increase by 15%increase by 20%

National Insurance

Help on National Insurance

Bands

Contacted-in rate	Threshold (£ per week)
0123456789101112	010203040505558606162636465687083100120200500Up to ceiling
01234567891011121314	Up to ceiling
Contracted-Out Rebate	00.20.51.01.41.61.82.02.5345

Other Parameters

National Insurance Ceiling in £ per week

3004004104204304404505755806006206406606807008009001000

Indirect Taxes

Help on Indirect Taxes

Specific Duties
Beer (extra per pint)	Abolish it!Cut by 10pCut by 5pNo change1234567891020DoubleTriple
Spirits (extra per bottle of whisky)	Abolish it!Cut by £3Cut by £1Cut by 50pNo change10p1220p30p50p75p£1£2£3£4£5DoubleTriple
Petrol (extra per litre of 4-star)	Abolish it!Cut by 10pCut by 5pNo change1234567891020DoubleTriple
Wine (extra per bottle)	Abolish it!Cut by 50pCut by 25pNo change2p3p5p102030405060708090£1£2DoubleTriple
Tobacco (extra per packet of 20)	Abolish it!Cut by 50pCut by 25pNo change123456p102030405060708090£1DoubleTriple
VAT (Value Added Tax)	0123456789101112131415161717.51819202122232425

VAT on Specific Goods
Books (%)	0123456789101112131415161717.51819202122232425
Childrens Clothes (%)	0123456789101112131415161717.51819202122232425
Food (%)	0123456789101112131415161717.51819202122232425
Fuel (%)	0123456789101112131415161717.51819202122232425
Car Tax (Vehicle Excise Duty (%)	Abolish it!501001101201301351401451501551601701801902002202502703004005001000

Benefits

Help on Benefits

Note: the model does not calculate macroeconomic effects of any of the following benefit variables

Specific Benefits
Child Benefit for all children	023456788.28.48.68.899.29.39.49.69.81010.210.410.610.81111.211.411.611.8121314151617181920
Extra Child benefit for the first child	50p11.522.5345678910
Job Seekers Benefit	Abolish them!Cut by 50%Cut by 25%Cut by 20%Cut by 10%Keep unchangedIndex themIncrease by 5%Increase by 10%Increase by 20%Increase by 25%Increase by 50%Double them!
Retirement Pensions	Abolish them!Cut by 50%Cut by 25%Cut by 20%Cut by 10%Keep unchangedIndex themIncrease by 5%Increase by 10%Increase by 20%Increase by 25%Increase by 50%Double them!
Other National Insurance (NI) Benefits	Abolish them!Cut by 50%Cut by 25%Cut by 20%Cut by 10%Keep unchangedIndex themIncrease by 5%Increase by 10%Increase by 20%Increase by 25%Increase by 50%Double them!
Working Families Tax Credit (WFTC)	Abolish it!Cut by 50%Cut by 25%Cut by 20%Cut by 10%Keep unchangedIndex themIncrease by 5%Increase by 10%Increase by 20%Increase by 25%Increase by 50%Double it!
WFTC Taper (%)	0510152025303540455050515253545556575859606570717273747580859095100
Income Support	Abolish it!Cut by 50%Cut by 25%Cut by 20%Cut by 10%Keep unchangedIndex themIncrease by 5%Increase by 10%Increase by 20%Increase by 25%Increase by 50%Double it!
Rebates (Housing Benefit)	Abolish it!Cut by 50%Cut by 25%Cut by 20%Cut by 10%Keep unchangedIndex themIncrease by 5%Increase by 10%Increase by 20%Increase by 25%Increase by 50%Double it!
Rent Rebate Taper (%)	051015202530354045505560616263646566676869707580859095100

Values are in pounds (£) per week where appropriate

Budget Constraints

Instead of producing calculations for all our families, it is also possible to produce a Budget Constraint plot for one of the families. These graphs show how the net income of the family changes as the earnings of one of the family members change.

All families without budget constraintEmployed single person, no children, £12k per yearEmployed single parent, one child, £9k per yearUnemployed couple, two children (Head)Unemployed couple, two children (Spouse)Single earner couple, two children, £12k per year (Head)Single earner couple, two children, £12k per year (Spouse)Single earner couple, two children, £17k per year (Head)Single earner couple, two children, £17k per year (Spouse)Two earner couple, two children, £50k per year (Head)Two earner couple, two children, £50k per year (Spouse)Two earner couple, two children, £100k per year (Head)Two earner couple, two children, £100k per year (Spouse)

The system used here was originally developed by BizEd and The Institute for Fiscal Studies, with funding from The Nuffield Foundation. The MacroEconomic model and forecasts were provided by Oxford Economic Forecasting. Web development was by KB7.