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Government should consider increase in tax threshold

Raising the threshold at which people pay income tax could be one way of stimulating the economy, according to a senior MP.

John McFall, the chairman of the Commons Treasury Select Committee, has floated the idea that the personal allowance threshold could be raised perhaps as high as £10,000 in order to encourage people to spend more.

Mr McFall said: “We should put money into the pocket of those with lowest incomes. This would also be a fiscal stimulus since this group is most likely to spend rather than save.”

But the Treasury was reported as saying that plans for Budget were still at a very preliminary stage.