Taxes have hit excruciating levels because the Tories can’t stop spending
The Conservatives are meant to be the party of low taxation. Reducing the burden of the state to encourage work, enterprise and personal responsibility is supposed to be one of their central missions, in contrast to Labour’s attachment to big government.
But in recent years the promise of tax reductions has often been little more than empty rhetoric. As public expenditure has increased remorselessly under Tory rule, so has the amount of cash taken by successive governments from the pockets of hardworking Britons.
Since Margaret Thatcher’s departure in 1990, there have been six Conservative prime ministers, and not one of them has succeeded in cutting the tax burden or reducing expenditure, despite all the overblown talk about austerity.
Jeremy hunt’s Budget this week continues that depressing pattern. his statement was packed with eye-catching announcements and high-profile giveaways, but when we scrutinise the detail of the small print, it becomes clear that most British taxpayers will be handing over substantially more to the Treasury, while living standards continue to fall. This is largely down to the political practice of driving up taxes by stealth.
The Government indulges in the pretence that it has kept rates at the same level, while in practice it rakes in more money as inflation pushes up the number of people paying higher rates of income tax. The process of failing to put up tax thresholds in line with inflation is known as ‘fiscal drag’ and it now operates on an epic scale, hitting the livelihoods of millions who find themselves hammered by ever greater demands as they are pushed into higher tax brackets.
ACCORDING to the office for Budget Responsibility, the stealth taxes introduced by the Government since April 2021 will raise £29.3billion a year by 2027/8. This is a figure that is roughly equivalent to a 4p increase in the basic rate of income tax. This punishment is being meted out right across the workforce, from the low paid to the affluent.
over the next five years, no fewer than 3.2 million people will become ‘basic rate’ taxpayers for the first time, two million will move on to the ‘higher rate’ of 40 per cent and 350,000 will have to pay the 45 per cent ‘additional rate’, which was originally intended just for the rich but now takes in a wide range of professions.
These statistics make a mockery of the Tories’ boasts about helping the ‘strivers’. headline rates may not have been altered, but make no mistake, taxes are being cranked up to excruciating levels.
The effect of the Government’s ill-conceived policy is illustrated by an examination of the tax burden, which the oBR estimates will reach 37.7 per cent by 2027/8, a post-war high and 4.7 per cent above where it was before the Covid pandemic.
DURING the last general election in 2019, Labour leader Jeremy Corbyn was rightly portrayed as a dangerous Left-wing ideologue. Yet we predicted that his plans were based on a peak tax burden of 37.9 per cent of GdP, just 0.2 percentage points higher than the level Mr hunt now envisages.
indeed, it is precisely because the Tories have copied many key, expensive Labour policies that the Government has been forced to push up taxes so much. in this week’s Budget alone, Mr hunt proposed a vast – and expensive – expansion of the welfare state through the extension of free childcare and other measures. At the same time, instead of reducing the state payroll, the Tories have extended it enormously.
According to research by the TaxPayers’ Alliance, the organisation i head, the public sector’s headcount has grown by 426,000 since 2018 – more than the total number of uK employees at Tesco, Britain’s biggest supermarket – with the state workforce now over 5.8 million and counting.
in the civil service alone, the headcount of officials has gone up by 77,000, even though many of its departments and associated quangos are failing miserably. Bodies ranging from the sclerotic dVLA to the bureaucratic uK Statistics Authority have grown in size despite Boris Johnson’s welcome promise to clamp down, and this doesn’t seem to be down to the pandemic as these staffers are here to stay.
The truth is that the Tory government has lost control of public spending, which, on current trends, is due to swallow up 60 per cent of GdP by the 2060s.
Amid all this profligacy, the traditional values of restraint, discipline and sound money have been lost. Sadly, as the Budget demonstrated, we will all pay a heavy price for this failure.