How the Tories pushed up taxes to a near-record high

AS JEREMY HUNT delivered what may be his final pre-election Budget, the message was that Conservatives know lower taxes mean higher growth.

However, he faces an inconvenient fact. Although the average worker will enjoy a £450 annual boost to their earnings after the Budget, the tax burden is on track to hit its highest level since 1948.

Since 2010-11, the Government’s income from taxes relative to the size of the economy has risen from 33.2 per cent to 36.3 per cent. The Office for Budget Responsibility (OBR), which scrutinises government spending plans, predicts that by 2028-29 it will surge to 37.1 per cent. This is slightly below the all-time high predicted in November of 37.7 per cent but would still be the second-highest since comparable records began in the late 1940s.

This means the tax burden will be higher than at any time since records began in 1948. It will dwarf levels hit during the 1970s, when the UK was forced to plead with the International Monetary Fund for an emergency loan. It will only sit a nudge below the record high of 37.2 per cent in 1948.

While a few percentage points may seem marginal on paper, workers and businesses have suffered a £100bn tax raid since 2019, according to the Institute for Fiscal Studies. It is equivalent to £3,500 per household.

It marks a difficult legacy for the Tories after 14 years in power and with its ratings at their lowest level since 1978 according to Ipsos. When David Cameron and George Osborne first entered Downing Street in May 2010, the tax burden stood at 33.2 per cent.

In their final year in power before the Brexit vote, it had fallen to 32.8 per cent.

In the three years of Theresa May’s premiership with Philip Hammond as chancellor, the tax burden fell from 33.6 per cent to 33.1 per cent in 2019-20. Yet the start of the current parliament in 2019 put the UK on a path to the highest tax burden in recent history.

During a period that came with three prime ministers – three years of Boris Johnson, 50 days of Liz Truss and a year and a half of Rishi Sunak – taxes have soared. Many workers will be unaware just how much more they are paying, as income tax thresholds have been frozen from April 2022. The policy was announced when Mr Sunak was chancellor in his 2021 Spring Budget.

The stealth rise is set to create nearly four million new taxpayers over the next five years as salaries rise above the minimum threshold of £12,570, according to the OBR’S new analysis.

Meanwhile, close to three million people will have been pulled onto the higher rate of 40 per cent and 600,000 onto the additional rate of 45 per cent.

Jeremy Hunt also became the first chancellor in 50 years to raise the corporation tax rate, from 19 per cent to 25 per cent. Britain’s crumbling public services, a sicker and older population and a greater threat of war mean the next resident in 11 Downing Street – most likely Labour’s Rachel Reeves – will struggle to reverse these changes. Even as workers are handed a 2p cut to National Insurance, Britons may have to get used to paying higher taxes for what feels like worse public services.