I think you've missed the point. I'm well aware how a tiered taxation system works. The point is, if you get an adjustment for inflation and that (numerically) extra money is all taxed at the highter rate, and the government doesn't raise the tier to allow for inflation (which they don't) you have a DECREASE in net pay IN REAL TERMS.
Eg. in 2004/5 you earn 38,000 - you pay 7,866 in tax leaving net 30,134
in 2005/6 your income is adjusted for a CPI increase of 3% so you earn 39,140 - you pay 8256 in tax leaving 30,884 - ***or 29,958 as a REAL comparison to the previouse year - YOU HAVE HAD A PAY CUT!!!
Do you see why it took me a while to get my head round it
