Middle-class tax hike will exact a heavy price, MPS tell Hammond
Chancellor warned not to plug financial gaps by hitting those who offer the most to Britain’s economy
TORY MPS have warned Chancellor Philip Hammond that the Conservatives will pay a “heavy price” if he mounts a tax raid on middle-class families to plug a multibillion pound black hole in the public finances.
Treasury officials met last week and reportedly discussed increasing tax on fuel, homes and income, as part of a plan to find billions of pounds ahead of the autumn budget.
However, senior Conservative MPS have warned that Theresa May risks losing support from voters if tax rises target those on middle incomes, while a former minister said increasing fuel duty would hurt small businesses, prompting higher prices in the shops.
A Treasury source said discussions are at the “blue-sky thinking” stage but MPS are concerned that the Prime Minister has abandoned her promise, to protect those who are “just about managing”.
Nigel Evans MP, joint secretary of the powerful backbench 1922 committee, said the party must remember its reputation for low taxes as he urged “huge caution” when discussing possible hikes.
He told The Daily Telegraph: “We saw what happened in the general election when the Conservatives turned on people who normally vote for them – we are now in minority government.
“We have to be incredibly careful to be as loyal to people who vote for us as they are, there has to be huge caution when thinking about this issue.
“People vote Tory because they want to see a reduction in their taxes, not an increase – and we said we would keep taxes as low as possible. If we go down the path of caning people for the sake of it then we will have to pay a heavy price.”
It warnings come amid reports that the Government is considering a tax on diesel in a bid to reduce the number of harmful emissions from vehicles. At the meeting of officials last week the possibility of increasing fuel duty, delaying an increase in the personal allowance, and a cut in corporation tax were all said to have been discussed.
Treasury experts also raised the prospect of raising council tax levels on large homes, which could see increases of up to 10 per cent, as well as a cut in the higher-rate of pension tax relief.
Jacob Rees Mogg, a Tory MP who has served on the Treasury select committee, added that the Government should be looking at cutting taxes instead of increasing them.
He said that ministers need to learn the lessons of previous cuts to corporation tax which were followed by a significant rise in revenues.
Mr Rees-mogg said: “This isn’t blue skies, it’s black skies. They don’t seem to get the point that lower rates increase revenue if you focus on the right taxes.
“All they are doing is squeezing tighter and tighter. It was the right approach in 2010. It is not the right approach now.
“They are hitting the people who have already made a big contribution and don’t have the broadest shoulders. To put a burden on those who have seen very little improvement in their standard of living would be a mistake in economic policy.”
A Government source said: “The Prime Minister has said many times that the Conservative Party will always be the low-tax party.”
Rob Halfon, a former Conservative minister who campaigns for fair taxes on fuel said: “Fuel duty doesn’t just hit drivers, it hits businesses who rely on transportation, it hits bus fares, and it hits food prices because of increased transport costs.
“There is a lot of evidence to show that keeping fuel duty frozen has been one of the greatest achievements of the Conservative government.”