BIGGEST TAX CUTS FOR 30 YEARS!
Chancellor vows ‘new era for Britain’ as he unveils a massive package of measures to turbo-charge growth
THE Chancellor will hail ‘a new approach for a new era’ of growth today as he unveils the biggest tax giveaway in three decades.
Vowing to break a ‘cycle of stagnation’ that has lumbered Britain with a massive tax burden, Kwasi Kwarteng will outline action to support families and boost business.
His ‘growth plan’ has 30 measures to drive down taxation, tackle high energy bills and curb inflation. It includes cutting stamp duty, reversing the national insurance rise and scrapping a planned increase in corporation tax. Government sources suggested there might be a further ‘rabbit out of the hat’ announcement – possibly a 1p cut in the basic rate of income tax next year.
In other financial developments:
The Bank of England yesterday hiked interest rates by 0.5 percentage points to 2.25 per cent – the highest level since 2008;
It also declared that the economy was now shrinking but that a deep recession might be averted and inflation brought more under
THE national insurance hike will be reversed from November 6, the Chancellor announced yesterday.
In a victory for the Daily Mail’s Spike the Hike campaign, Kwasi Kwarteng said the 1.25 percentage point rise for workers and businesses would be axed.
Since April, workers and employers have been paying an extra 1.25p in the pound to hep fund the NHS and social care.
In July then- chancellor Rishi Sunak raised the threshold at which NI is paid to offset the increase for many workers. But the Mail led calls for the Government to spike the hike altogether amid the cost of living crisis.
Yesterday Mr Kwarteng confirmed that the rise would be reversed in November. He said the Government would also cancel the health and social care levy, which was due to come into force in April 2023 to replace the national insurance rise.
Reversing the hike will help nearly 28million workers keep more of what they earn. The move will be worth an extra £330 on average in 2023-24. It will also reduce tax for 920,000 businesses by nearly £ 10,000 on average next year, according to the Treasury.
MPs are expected to vote on repealing the levy when they return from party conferences.
The tax was expected to raise around £13billion a year to fund health and social care – but the Chancellor has confirmed that the funding will be maintained at the same level as if the levy was in place. Mr Kwarteng said: ‘Taxing our way to prosperity has never worked. To raise living standards for all, we need to be unapologetic about growing our economy.’
He added: ‘Cutting tax is crucial to this – and whether businesses reinvest freed-up cash into new machinery, lower prices on shop floors or increased staff wages, the reversal of the levy will help them grow, while also allowing the British public to keep more of what they earn.
‘A tax cut for workers. More cash for businesses to invest, employ and grow.’ The reversal was welcomed last night by business leaders, who said it would help support livelihoods and jobs.
Kitty Ussher, chief economist at the Institute of Directors, said: ‘At a time when business is already facing unprecedented energy and other supply- side costs, this is a hugely important change that can improve the situation for SMEs trying to grow in very difficult circumstances.’
Martin McTague, national chairman of the Federation of Small Businesses, said: ‘This is clear and decisive action to support growth.
‘The decision to reverse all four of these tax rises will support livelihoods, jobs and small businesses across the UK.
‘Removing taxes on jobs, investment and growth is the right thing to do, and FSB has campaigned long and hard for this decision.’
And the British Chambers of Commerce said the announcement would provide ‘much needed support for businesses during these difficult times’.
The Chancellor is also expected to announce that a 1.25 percentage point increase in income tax on dividends, introduced in April 2022, will be reversed from April 2023.