Spring Statement: Rishi Sunak leaves 11 Downing Street
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Chancellor Rishi Sunak will today set out his Spring Statement for 2022 against a backdrop of a cost of living crisis gripping the UK, with food, fuel and energy costs on the up. Many hope the Chancellor will scrap the National Insurance hike, which is due to rise by 1.25p to the pound, as well as axing fuel tax and more, but only time will tell what Mr Sunak will be able to deliver on.
The chancellor is expected to highlight how the war in Ukraine will make these price rises worse – but will say a stronger British economy will overcome the challenges.
But Mr Sunak is already facing criticism before even stepping up to the dispatch box, with Labour’s Shadow Chief Secretary to the Treasury Pat McFadden branding him the “high tax chancellor”.
He accused Mr Sunak of being behind major tax rises since he took over the office two years ago, affecting dozens of households and businesses.
The SNP has also lashed out, dubbing Mr Sunak “the poverty chancellor”. But what changes have been made since he took charge of the Treasury?
The 15 tax hikes are:
- Corporation tax increase announced in budget 2020
- Council tax measures announced in spending round 2020
- Reduction in entrepreneurs’ relief for CGT announced in budget 2020
- Corporation tax increase in budget 2021
- Income tax personal allowance freeze in budget 2021
- Inheritance tax threshold freeze in budget 2021
- CHT annual exempt allowance freeze in budget 2021
- VAT registration threshold for business freeze in budget 2021
- Health and social care levy in autumn budget 2021
- Dividend tax in autumn budget 2021
- Freeze in starting rate band for savings tax in autumn budget 2021
- Freeze in adult ISA subscription limit in autumn budget 2021
- Income tax basis period reform in autumn budget 2021
- Council tax measures in autumn budget 2021
- Freeze in student loan repayment threshold announced in January 2022
In the past two years, tax rises worth two percent of GDP (by 2024 to 2025) have been announced by this Government – something which took Tony Blair and Gordon Brown 10 years.
Writing for the Institute for Fiscal Studies, Isaac Delestre, Helen Miller and Ben Zaranko said: “If current plans are enacted, the scale of the tax increases will be large by historic standards.
“These will start this April with an increase in rates of National Insurance Contributions and a cash freeze in income tax thresholds, and be followed by an increase in corporation tax rates in April 2023.
“The overall impact will be to gradually ramp up the UK tax burden by an eventual 2% of GDP, according to the Treasury’s own scorecard – equivalent to around £46 billion in today’s money.”
Yet Rishi himself claims to ‘firmly believe in lower tax’. Speaking at the Bayes Business School in February, the Chancellor pledged to cut taxes “sustainably” and “deliver a low tax, higher growth economy”.
He said: “I am going to deliver a lower tax economy but I am going to do so in a responsible way, and in a way that tackles our long term challenges. I firmly believe in lower taxes.”
Speaking at the time, Shadow chancellor Rachel Reeves announced that the Conservative Party was “now the party of high tax”, adding: “The chancellor may say he ‘believes’ in low taxes in his lecture – but the hard facts are that Sunak has hit households and business with 15 tax rises in two years in post – with an unfair National Insurance rise down the line,” Ms Reeves said.
“He has raised the most tax on average per budget than any chancellor in the last 50 years.”
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