Weren’t conservatives once the party of tax cuts? Taxpayers face a £114 billion bill in what is set to be Parliament’s biggest ever tax rise.
- The government will raise £3,500 per household between now and next year’s election.
- Stealth taxes and corporate tax hikes among key policies blamed
By Jean-Paul Ford Rojas
Published: 7:02 p.m. EDT, September 28, 2023 | Update: 7:18 p.m. EDT, September 28, 2023
Taxpayers face a £114 billion bill in what is set to become Parliament’s biggest tax rise on record, a shock report warns.
Between now and next year’s election, the Government will increase the huge extra sum – which amounts to £3,500 per household – beyond what it would have received if the tax burden had remained at levels of 2019, analysis by the Institute for Fiscal Studies (IFS). watch.
Ben Zaranko, senior researcher at the IFS, said: “It is likely that this Parliament will mark a decisive and permanent shift towards a higher tax economy. »
The report will increase pressure from Tory MPs on Chancellor Jeremy Hunt to cut taxes.
Stealth taxes – which push households into higher brackets – and a sharp increase in corporate taxes are among the main policies criticized.
Between now and next year’s election, the Government will raise £3,500 per household in Parliament’s biggest ever tax collection.
The tax burden is expected to reach around 37 percent of national income, an increase of 4.2 percentage points during the legislature. This would be the largest increase since records began in the 1950s. The second largest increase, of 2.9 percentage points, occurred during Tony Blair’s first term as Labor prime minister, from 1997 to 2001.
“The government may decide to announce tax cuts in the run-up to the next election,” the report said. “But there is no world in which this Parliament – or indeed the period since Rishi Sunak became Prime Minister – turns out to be anything other than a tax-raising Parliament. »
Conservative MP Sir John Redwood, a former trade minister who was among those who pushed for tax cuts, said: “We are spending too much and getting too little return for it. We tax too much and we are not growing fast enough. When you grow faster, you will get more tax revenue.
Sir John argued that easing the burden of tax rules that hold back the self-employed and small businesses would help unlock growth, and that the fuel tax “ripoff” also needed to be tackled, as rising oil prices threaten to increase pressure. motorists’ fees at the pump.
The IFS calculation is based on official forecasts showing an increase in tax revenue as a proportion of GDP of 33.1 percent in 2019/20 – when Boris Johnson won a landslide general election victory – at an expected rate of 37.3 percent in 2024/25.
This is based on a total tax receipt of £996 billion in 2024/25. The IFS calculates that if the tax burden had been held constant at 2019 levels, the figure would have been around £882 billion.
The tax burden is expected to reach around 37 percent of national income, an increase of 4.2 percentage points during the legislature, the highest figure since records began in the 1950s.
Comparable records of tax receipts only go back to the 1950s. But broader measures of government revenue, going back further, suggest that the increases seen since 2019 are unprecedented in peacetime. Mr Zaranko said: “It certainly appears to be the most important tax-collecting parliament since at least the Second World War.
“This reflects decisions to increase public spending, partly driven by demographic change, pressures on the health service and some relaxation of austerity. »
IFS analysis suggests that Conservative governments will be responsible for both the biggest increase and the biggest fall in the tax burden – when it was reduced by more than 5 percentage points under Churchill’s government. 1951-1955.
Of six parliaments led by Labor governments since the 1950s, only one has reduced the tax burden. Until the 1990s, under eight Conservative-led administrations, only two increased the tax burden.
A Treasury spokesperson said: “Reducing inflation is the most effective tax cut we can offer at the moment, which is why we are sticking to our plan to halve it , rather than making it worse by borrowing money to finance tax cuts. »
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