Sunak set to preside over biggest set of tax rises since WWII, experts say
By the time of next general election, taxes will likely have risen to around 37% of national income
The current parliament will have presided over the biggest set of tax rises since at least the Second World War, experts have said.
By the time of the next general election, taxes will likely have risen to around 37 per cent of national income, according to analysis by the Institute for Fiscal Studies (IFS).
The widely respected thinktank said that the spike was equivalent to around £3,500 more per household, even if in reality it will not be shared equally.
Since comparable records began in the 1950s, no parliament has seen a bigger increase in taxes.
Tory MPs have long complained about the unwillingness of Rishi Sunak and Chancellor Jeremy Hunt to contemplate tax cuts, with backbench complaints about current levels of tax.
This is not, for the most part, a direct consequence of the pandemic. Rather, it reflects decisions to increase Government spending, in part driven by demographic change, pressures on the health service, and some unwinding of austerity
The pair have instead stressed the need for fiscal responsibility amid still-high inflation.
But Mr Hunt is likely to face pressure to announce tax cuts, if not in the upcoming autumn statement, then at least before the next nationwide poll.
Ben Zaranko, a senior research economist at the IFS, said the pandemic could not be blamed for rising tax levels and predicted that a high-tax approach was here to stay regardless of who wins the next general election.
“It is inconceivable that this parliament will turn out to be anything other than a tax-raising one – and it looks nailed on to be the biggest tax-raising parliament since at least the Second World War,” he said.
“This is not, for the most part, a direct consequence of the pandemic. Rather, it reflects decisions to increase Government spending, in part driven by demographic change, pressures on the health service, and some unwinding of austerity.
“It is likely that this Parliament will mark a decisive and permanent shift to a higher-tax economy.”
This was echoed by Mark Franks, the director of welfare at the Nuffield Foundation.
He said: “There will be strong pressure in coming parliaments to raise taxes further to meet growing demand for public services such as healthcare.
“Future governments must not only have a credible and robust strategy for the economy and the public finances, but should also be forthright and transparent about the difficult trade-offs they will face.”
Opposition parties seized on the findings, as Labour said that the Tories had “clobbered” the public.
Shadow chief secretary to the Treasury Darren Jones said: “Successive Tory government have overseen 13 years of low growth and stagnant wages. Their response in the face of this bankrupt legacy is always to load their failure onto working people. And what are we getting back? Crumbling public services.
“Brits are working hard but getting clobbered with 25 Tory tax rises and a continuing Conservative premium on their household budgets.”
Liberal Democrat Treasury spokesperson Sarah Olney said: “This Conservative Government crashed the economy and is making the public pay the price. This is the same party which promised not to raise people’s taxes and is now taxing families through the nose.
“Despite this, ministers have given tax cuts to the big banks, failed to close loopholes in the windfall tax on oil and gas giants and wasted eye watering sums on dodgy PPE contracts.”
A Treasury spokesperson said: “Despite needing to take the difficult decisions to restore public finances in the face of the dual shocks of the pandemic and Putin’s illegal invasion of Ukraine, the latest data shows our tax burden will remain lower than any major European economy.
“Driving down inflation is the most effective tax cut we can deliver right now, which is why we are sticking to our plan to halve it, rather than making it worse by borrowing money to fund tax cuts.
“We have also taken 3 million people out of paying tax altogether since 2010 through raising personal thresholds, and the Chancellor has said he wants to lower the tax burden further – but has been clear that sound money must come first.”