The UK tax burden will hit its highest level since World War II as a £30bn stealth tax comes into force in the wake of Jeremy Hunt’s budget.
According to the Office for Budget Responsibility (OBR), an increase in the income tax bill is equivalent to a 4 pence increase in the basic tax rate.
The prime minister promised Wednesday that his budget will help the economy grow with measures designed to encourage business investment and the return of the unemployed to the workforce.
But he rejected calls by his Conservative colleagues to cut taxes, warning that it would destabilize the public finances, and offered a giveaway only to the wealthiest by removing caps on tax-exempt pension savings. was denounced as
By 2028, government tax revenue will reach 37.7% of GDP, almost 5% higher than pre-pandemic levels.
The OBR calculates that up to £29.3bn per year due to a series of stealth tax increases triggered by the freeze to the threshold where people start paying the base rate, higher rates and additional rates of income tax. increase.
An additional 3.2 million pay income tax and are exempt if the threshold is raised to match inflation, but 2.1 million are dragged into the high tax rate of 40p and a further 350,000 are taxed at the top rate. You will pay 45 pence.
Ranil Jayawardena, Member of Parliament who founded the Conservative Growth Group, said: Prime Minister will take over. ”
Hunt, refusing to promise tax cuts ahead of the elections expected next year, told ITV:
“And that’s the election dividend we get. I’m not interested in playing games.”
In the budget document, he said that growth would remain close to zero as house prices fell and living standards were squeezed for the second year in a row, but that an improving economic outlook could push the UK into recession this year. We welcomed OBR’s assessment that it is likely to escape from.
The prime minister plans to abide by his own self-imposed fiscal rule that over the next five years the debt will begin to fall as a percentage of GDP, but the surplus will continue to rise even though public spending is capped at 1 a year. We only have £6.5 billion in funding. Growth of cents per year.
Mr. Hunt took advantage of the slightly improved financial situation to freeze fuel taxes for a year, increase funding for the childcare system so that children aged 9 months and older receive free childcare, and increase profits. provided tax breaks for companies reinvesting their assets, raising the current level. Help with household utility bills.
He also announced a series of reforms to benefits and pension rules designed to encourage those who have left the workforce to return. It benefits only one person.
The Prime Minister said in the House of Commons: I’m growing up today. We tackle the two biggest barriers to business growth: investment incentives and labor supply. Declineists are wrong, optimists are right. We stick to the plan because it works. ”
In response, Labor Party leader Sir Kea Sturmer said: But like millions of people across our country, this budget has left us stuck in waiting rooms with nothing but plaster on hand. A country that has fallen behind its competitors and has embarked on a path of controlled decline. ”