Sunak: Budget won’t bring yet more tax rises

RISHI Sunak has ruled out fresh tax rises in next month’s Budget – as Boris Johnson insisted the Tories are still the ‘party of low taxation’.

Ministers acknowledged that this week’s plan for a £12billion-a-year ‘health and social care levy’ was ‘effectively a mini-Budget’.

At the Budget in March this year, the Chancellor set out £30billion-a-year in extra taxes as he set about rebuilding the battered public finances in the wake of the pandemic.

Mr Sunak this week announced plans for the Autumn Budget to take place on October 27, raising fears that taxes could rise again.

But a Treasury insider said there would be no significant tax rises in that Budget. The source said the Chancellor felt he had ‘done enough on the tax side this year’.

Instead he will present a ‘technical Budget’ which is likely to be overshadowed by a three-year spending review unveiled the same day. The decision came as the debate over the latest tax increase intensified.

Mr Johnson acknowledged that the 1.25 per cent rise in national insurance which will fund the new care levy breaks his manifesto pledge not to raise the main tax rates.

He said it was ‘not something I do lightly’ but said it was necessary to clear the NHS waiting list caused by the pandemic, and tackle the social care crisis.

Last night, the Prime Minister told Tory MPs: ‘We must never forget after all that we’ve been through... we are the party of free enterprise, the private sector, low taxation.’

The Institute for Fiscal Studies warned the new levy would leave Britain with the highest sustained tax burden in history.

Health Secretary Sajid Javid yesterday insisted the Conservatives are still ‘the party of low tax’.

Mr Javid, who has a portrait of Margaret Thatcher in his office, said: ‘If we believe in an NHS that’s paid out of general taxation, this is a very Conservative move.’

He said that even with the latest increase, Britain’s tax burden was ‘still lower than Germany, it’s lower than Italy, it’s lower than France, so we remain a low tax country’.

But some Tory MPs warned that raising taxes would damage the party’s reputation.

Former minister Steve Baker described the tax plan as ‘socialist’. He said that ‘at some stage in our lifetimes the Conservative Party is going to have to rediscover what it stands for’. Referring to the decision to raise taxes specifically for the NHS, he said: ‘Down that road, lies ruin’. Fellow Tory Marcus Fysh said Britain was in danger of becoming ‘a health service with a country attached’.

The Federation of Small Businesses last night warned that the ‘regressive’ rise in national insurance could push up unemployment by 50,000.

Small businesses will pay £5.7billion more per year in employer NI contributions a result of the tax rise, the FSB said.

Chairman Mike Cherry said: ‘It could mean 50,000 more people out of work after it takes effect in April. That means 50,000 livelihoods harmed – 50,000 people who would otherwise be at work in our economy.’

Torsten Bell, chief executive of the Resolution Foundation, said that low tax conservatism was ‘in retreat in the Conservative Party’. In a report yesterday, the think-tank said the Chancellor had ‘announced bigger tax rises over the past six months than seen in any Budget since at least the mid-1970s.

‘These total over 1.6 per cent of national income, with the Government showing itself to be more than prepared to face up to the tax consequences of announcing big permanent increases in the size of the state.’

Entrepreneur Luke Johnson warned the tax rises would damage Britain’s reputation with investors. Mr Johnson told BBC Radio 4’s Today programme: ‘This isn’t a very Conservative government by many measures.’

Last night the Treasury said it did ‘not recognise’ the Federation of Small Businesses’ jobs figures.