The well-trailed 2p cut in National Insurance Contributions (NICs) has dominated the Budget headlines, amounting to a net tax cut of £9bn. However, this is dwarfed by Tory stealth tax rises of an estimated £27bn that came into effect last year, and a further £19bn coming in after the election.
The tax burden is now at a 70-year high, and people have taken an unprecedented hit to their living standards in recent years. Those earning £19,000 or less will now be worse off because, as more of their pay is dragged above the frozen tax-free allowance of £12,570, they’ll lose more than they gain from NIC cuts. The biggest gainers are those earning £50,000, meaning that this is a Budget that will hit the poorest hardest.
Looking over the longer term, the average wage after taking into account inflation will take until 2026 to get back to its 2008 level – nearly two decades of lost pay growth.
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