Definition of fiscal drag in English:
noun[mass noun] Economics
The deflationary effect of a progressive taxation system on a country’s economy. As wages rise, a higher proportion of income is paid in tax.
- It has raised taxes so that an extra $1.5 billion will be paid this year just as a result of people moving into higher income tax brackets through fiscal drag.
- If every Budget has a theme, this year's is likely to be the extra amount of money the Treasury makes by leaving thresholds unchanged as prices and salaries rise - the so-called fiscal drag.
- As many salaries are rising faster than this, more people will enter the top tax bracket - fiscal drag in operation and a classic stealth tax.
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