Definition of fiscal drag in English:

fiscal drag


  • [mass noun] 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.

    • ‘What will happen to the $1.4 billion in additional taxes that New Zealanders will pay in the 3 years because of fiscal drag?’
    • ‘My feeling is that he will do it after the election, not by any direct tax increase, but 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.’
    • ‘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.’