The Tax Rise! Tory voters are to blame (yes, you all are)

Don’t look at me I didn’t vote for any of these clowns. Don’t look at me I’m not just sitting around and screaming at Twitter. Don’t look at me I want to get on with my life and work.

I know others want to get on with it too but you’re too quiet, far too quiet. For goodness sake they’re rioting in Spain because a rapper was jailed for insulting the monarchy and praising terrorism.

Rishi didn’t have a choice in doing this but he did have a choice in sticking around during the lockdown, he should have spent the last 6 months talking directly to the public at how awful these lockdowns were – because guess what? THEY DIDN’T WORK!

Full piece from the Times…

Middle England will bear the brunt of Rishi Sunak’s £21 billion personal tax raid, the Institute for Fiscal Studies has warned.

The think tank said that five million people, equivalent to one in six taxpayers, will pay the higher rate of income tax by 2026 after Sunak decided to freeze thresholds. It compares with one in 15 in 1990.

Sunak used his budget yesterday to freeze the threshold for the basic rate of income tax at £12,500 and the higher rate at £50,000. It means an additional 1.3 million people will be dragged into paying the tax by 2026, and one million people will become higher-rate taxpayers.

Paul Johnson, the head of the IFS, said: “The increases in the income tax personal allowance over the 2010s were key to ensuring the remarkable outcome that, during a period of severe austerity, ‘middle England’ did not lose.

“They will be the ones hit by freezing it over the next few years. This is a very big change in the structure of income tax. The basic rate may have fallen but a lot of people are paying higher rates of income tax.”

Sunak also used his budget to announce that corporation tax will increase from 19 per cent to 25 per cent in 2023, a move that has been met with strong resistance by business leaders.

However, despite the tax rises, a poll by YouGov suggested that the Tories have enjoyed a four-point “budget bounce”. They now lead Labour by 45 per cent to 32 per cent.

There is majority approval for nearly all the measures in the budget, including freezing income tax rates. Fifty-five per cent of people think it is fair compared with 12 per cent who think it is not.

Sunak said this morning that years of business tax cuts had not increased investment, unravelling decades of Conservative orthodoxy.

The chancellor defended his plans to raise corporation tax to 25 per cent, just shy of what Jeremy Corbyn proposed at the last election, by suggesting that resurgent business tax receipts in recent years were not related to Conservative governments’ drastic cuts to the rate.

Under George Osborne corporation tax fell from 28 per cent in 2010 to 20 per cent, and since then under Philip Hammond it was cut to 19 per cent. Sunak’s announcement represents the first rise in the main rate of corporation tax since 1973.

Sunak suggested this morning that years of cuts had had scant impact on the exchequer. “If you look at the record over the past several years, corporation tax receipts have risen as the corporation tax rate has come down, but the vast majority, if not all, of that increase in corporate tax receipts is probably more likely due to the cyclical recovery in corporate profits, which took a real hammering in the last crisis and have taken actually quite a long time to recover,” he told Today on BBC Radio 4.

“There was an idea that [corporation tax cuts] could help spur investment, and what we’ve seen over the past few years is that we haven’t seen a step change in the level of capital investment that our businesses are doing as a result of those corporation tax decreases.”

Sunak’s argument represents a profound shift in Conservative economic policy. During the 2019 election, when Labour wanted to raise corporation tax to 26 per cent, Boris Johnson told the CBI that Corbyn would “whack it straight back up to the highest levels in Europe”.

Sunak has vowed that when the new rate takes effect the UK will still have the lowest corporation tax rate in the G7, which includes the US, Germany and France — although Osborne believed that Britain should have the lowest rate in the G20.

The corporation tax rise, which is projected to raise £17 billion a year by the end of the parliament, was described as a “screeching U-turn on Conservative policy over the last decade” by Paul Johnson.

Describing it as a rise “of historic proportions”, he said it would “take the UK well up the international league table for corporation tax revenues and would certainly take revenues well above their level back in 2010 when the coalition government set about its series of rate reductions”.

He added: “Whether that rise in the corporation tax will actually be delivered without additional concessions we will wait and see. I reckon 50-50 at best.”

The Resolution Foundation think tank said that the announcement “marks not only an abrupt U-turn on a decade of Conservative chancellors prioritising lower corporation tax, but a big departure for the traditionally low-tax party”.

Torsten Bell, the think tank’s chief executive, said he expected a business revolt against the measures before they kick in from 2023. “I would be surprised if the CBI do not say then, this is absolutely bonkers,” he predicted.

David Gauke, a Conservative minister in the Treasury from 2010 to 2017 as corporation tax was repeatedly cut, said the rise would “mean that ordinary people won’t see increases in wages and salaries”.

He told talkRADIO: “We’ve got to attract business investment to the UK. We’ve had a difficult time, it has to be said, over the last five years on that since the Brexit vote. But one of the advantages that the UK has had that could be useful in future is a really competitive corporation tax regime. But I’m afraid that’s gone, that’s been abandoned and I do worry that by choosing to focus on corporation tax, which is undoubtedly the politically easiest way in which the chancellor could raise revenue, he is in the long term going to damage our productivity.”

Sunak also faced questions over why social care, a sector overrun by coronavirus, was absent from the budget. He said this morning that it went unmentioned because the government is “committed to finding ideally a cross-party solution to sustainable social care funding” and that it is “going to take some time and thought to get it right”.

That represents a different tone to Boris Johnson in his first speech outside Downing Street in 2019, when he said he would “fix the crisis in social care once and for all with a clear plan we have prepared”.

In any case, the Labour Party reacted with bemusement to claims that the government is pursuing a bipartisan deal on the issue. Liz Kendall, the shadow minister for social care, said the issue “has not been discussed or even raised with me by any minister. Despite my regularly asking.”

The budget also contained a cut in NHS spending from this year to next, with NHS England allocated £139 billion for 2021-22, down from £148 billion this year.

That figure includes spending on confronting coronavirus, which explains the fall.

Nevertheless, experts questioned whether health spending could really fall as the country emerges from the pandemic. “Is the NHS really going to revert to its pre-Covid spending plans after April 2022? In reality, there will be pressures from all sorts of directions,” Paul Johnson said. “The NHS is perhaps the most obvious. Further top-ups seem near-inevitable.”