Prime Minister Gordon Brown is believed by the chairman of the Treasury Select Committee John McFall, to be considering making changes in the Budget that includes raising the tax free threshold.
For the first £6,035 employees earn, they aren't taxed, and according to McFall, raising that limit to £10,000 would help boost the economy, The Times reports.
'We should put money into the pocket of those with the lowest incomes. These are the people who need our support.
'This would also be a fiscal stimulus since this group is most likely to spend rather than save,' he said.
Yesterday it was announced that Chancellor Alistair Darling was set to announce more fiscal stimulus plans in the Budget, in an interview with the FT, after the 2.5% VAT cut has had little impact on getting consumers to spend again.
Tax | Salary sacrifice pension changes will cost businesses £2.9bn extra tax