Defiance as taxes close to new high
JEREMY Hunt has refused to commit to tax cuts before the 2024 General Election – putting him on a collision course with Tory backbenchers.
With the tax burden on course to hit its highest level since the Second World War, the Chancellor merely insisted the Government will “bring down taxes when we can”.
Mr Hunt’s remarks come on the day after it was confirmed that millions will be dragged into paying more income tax.
Tax and national insurance thresholds have been frozen, meaning as wages fail to keep pace with price rises, many workers end up being pulled into higher bands.
The IFS think-tank predicts basic-rate earners face paying £500 more duty and higher rate earners £1,000 more in 2023-24 as a result.
Institute for Fiscal Studies director Paul Johnson warned that families would feel “continuing pain” due to the threshold freeze.
Mr Johnson said Office for Budget Responsibility “projections suggest that real household disposable incomes will be no higher in 2027 than they were in 2019, and barely higher than in 2017 – a lost decade for living standards”.
He added: “Inflation may be coming down, but prices remain much higher than two years ago. Earnings haven’t caught up.”
His stark assessment came as the OBR said the tax burden is on course to hit 37.7 per cent of GDP, the highest level for more than 70 years.
That is also partly the result of the corporation tax rate going up from 19 to 25 per cent – despite business protests.The ratio of this tax to GDP will rise to its highest since it started in 1965.
In five years, 3.2million previously not liable for income tax will be paying it, while nearly 2.5million will be pulled into higher brackets.
Tory MP Simon Clarke told LBC a soaring tax burden “isn’t a sustainable position. It isn’t good for growth.”