The Scottish Mail on Sunday
Javid weighs up tax raid on the wealthy
SAJID JAVID risks angering traditional Tory supporters by eyeing up a tax raid on higher earners in his Budget next month to fund Boris Johnson’s bid to ‘level up’ the economy.
Treasury insiders have revealed the Chancellor is considering a range of reforms, including pension tax relief, that could hit better-off voters. That would ease the strain on the public finances and fulfil Mr Javid’s ambition to make the tax system ‘fair and efficient’.
However, talk of the move will unnerve some Tory MPs worried that the party risks abandoning its traditional supporters with what they see as Jeremy Corbyn-style ‘rinse the rich’ tax plans.
Under current rules, people paying into pensions receive tax relief at the same rate as their income tax rate – meaning higher earners receive 40 per cent relief. Cutting that to the lower 20 per cent rate would save Mr Javid more than £10billion a year.
The Chancellor is already working with Mr Johnson to implement promises in the Tories’ Election manifesto to remove ‘arbitrary tax advantages for the wealthiest in society’. It is understood that Mr Sajid has yet to reach final decisions on what will go in his March 11 Budget.
But the financial statement will be seen as key test of whether the Prime Minister is happy to take the political risk of hiking tax on the party’s traditional supporters – including millions in the Tories’ southern England heartlands – to help new supporters in the North of England and Midlands.
Mr Johnson is under huge pressure to deliver for the newly elected Tory MPs in the North of England who won seats in Labour’s so-called Red Wall.
Reports yesterday said
Treasury officials are pushing Mr Javid to reform taxes that mainly benefit the better-off.
However, a planned cut to corporation tax from 19 per cent to 17 per cent has already been scrapped to free up public cash for the NHS.
Allies of the Chancellor say he is wary of the potential backlash from longstanding Tory voters if he does go for widespread tax reforms.
One said: ‘Saj is not 100 per cent convinced – it’s a live debate.’