Family finances are being hit as bills and taxes rise faster than incomes, a centre-right think tank warns.
The Centre for Policy Studies says the average household pays £7,800 a year more tax than when Labour took power.
It adds that rising mortgage interest and household bills have left families struggling with "excessive" debt.
The government says the tax burden on a single-earner family with two children is lower than in 1997, with tax credits meaning 40% of families pay no net tax.
The report, entitled Why Do We Feel So Broke?, says that, until recently, average families had been able to absorb tax increases partly through rising salaries and greater levels of personal debt.
'Less disposable income'
But since 2005 increases in disposable income after tax and housing costs have stalled or gone into reverse.
The report says disposable income has gone down from 71% of gross income in 1997 to 67% today.
It says average-earning families have been hit particularly hard with disposable income falling by £950 since 2002.
The Centre for Policy Studies says the increase in taxation, combined with the recent easy availability of credit, is a "toxic combination".
The report says the level of credit card debt has been falling since 2005 but suggests many families have used mortgage advances to pay off their cards.
It says the combination of rising costs and stagnating earnings leaves British households "more vulnerable to, and less prepared for, any economic downturn".
Shadow chancellor George Osborne said the report showed families were "feeling the squeeze" as a result of stealth taxes. |
