What is Fiscal Drag? I 60 Second Economics

Fiscal drag is a key A-level economics concept explaining how governments increase tax revenue without changing tax rates. In this video, we break down how frozen tax thresholds, rising wages, and inflation combine to push more people into paying higher taxes. You’ll explore the entry effect, the bracket effect, and real UK data showing the growing impact. Perfect for exam revision, this video helps you evaluate fiscal policy and understand its real-world consequences on income distribution.