fiscal drag

noun

1. economics the process by which, during inflation, rising incomes draw people into higher tax brackets, so that their real incomes may fall; this acts as a restraint on the expansion of the economy

Example Sentences

Frozen thresholds contribute towards what is known as "fiscal drag" and amount to big tax rises – where people can be hauled into paying a tax, or a higher rate of it, courtesy of inflation.

From BBC

Critics have argued that employees will also face a greater burden as the chancellor is expected to extend the freeze on income tax thresholds, which is currently due to end in April 2028 and sees people pulled into paying higher rates through a phenomenon known as "fiscal drag".

From BBC

The policy amounts to a tax rise because of a process called "fiscal drag", which sees more people "dragged" into paying higher rates of tax as their wages rise.

From BBC

The decision not to increase tax thresholds would continue a process called "fiscal drag", in which more people are "dragged" into paying tax, or higher rates of tax, as their wages rise and cross the unchanging thresholds.

From BBC

The policy amounts to a tax rise because of a process called "fiscal drag", which sees more people "dragged" into paying higher rates of tax as their wages rise.

From BBC