Hammond: tax is right if the rich are moaning

Chancellor tells MPS that when the wealthy grumble, it is evidence that he has struck the right balance

Complaints from wealthy people that they are paying too much tax prove that the Government has the correct policy, the Chancellor said yesterday. Philip Hammond told the Commons Treasury committee it was one sign he had got “the balance right”. He also said that despite success in the long battle to defeat the budget deficit, the tax burden would continue to rise to fund the care of the ageing population, and that higher earners in particular should brace for a bigger tax bill.

RICH people “grumbling” about the amount of tax they pay is a sign the Government has got its policy right, Philip Hammond said yesterday.

The Chancellor told MPS that squeezing better-off taxpayers to the point at which they complained was one sign that he had got “the balance right”.

Taxes accounted for 37 per cent of Britain’s GDP in 2018-19, according to the Office for Budget Responsibility (OBR) – a share not seen for decades and one of the highest since the Fifties.

And despite success in the long battle to defeat the budget deficit, the Chancellor said the tax burden will rise further.

He said taxes would increase for years to come, mainly to cover the cost of looking after Britain’s ageing population.

Appearing before the Commons Treasury committee, Mr Hammond said higher earners in particular should brace for a bigger tax bill.

He said: “The trick in any tax system is to get the balance right.

“If taxpayers who are paying a large amount of tax weren’t grumbling we wouldn’t have got it right.

“Equally, if they were all deserting the country and moving outside the jurisdiction, we wouldn’t have got it right. Many of the people who can provide the richest tax harvest have the greatest opportunity for international mobility, of themselves and of their taxable activities and assets.”

The Chancellor said the country’s bumper tax yield remained “below the OECD average” but would keep rising. “I would like to think we will able to keep ourselves at or below the OECD average,” he said.

“The tax share of GDP has been rising across the OECD, and the reason is fairly straightforward – it is a function of an ageing population. We have to recognise that as the population ages, the pressure on public services and spending will increase.”

Public borrowing fell to £24.7 billion in the 2018-19 financial year – a drop of £17.2 billion on the year as surging tax revenues outstripped rising spending.

This was £1.9billion more than the OBR forecast last month but still the lowest in 17 years, the Office for National Statistics said.