Boris Johnson’s tax cuts would drive up to 100,000 familes into poverty, study finds

Plan to slash national insurance and income tax for wealthier earners would drive up inequality and disproportionately benefit the rich, think tank says

Benjamin Kentish
Political Correspondent
Wednesday 19 June 2019 15:34
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Boris Johnson’s promise to cut taxes if he becomes prime minister would force up to 100,000 families into poverty, new analysis has found.

The Tory leadership frontrunner’s pledge to slash national insurance and raise the threshold for the higher rate of income tax from £50,000 to £80,000 would drastically increase inequality and drive up relative poverty, according to research by the New Economics Foundation (NEF) think tank.

Mr Johnson has faced criticism from rivals over his tax plans. The NEF analysis found that the move would cost £9.5bn a year and would make the wealthiest 20 per cent of families £1,790 a year better off, while doing nothing to help the poorest 20 per cent. As a result, 50,000 households would be forced into relative poverty.

The former foreign secretary has also vowed to abolish national insurance on the first £1,000 of earnings each month, as has one of his main rivals, Jeremy Hunt. According to the new analysis, this would cost £8.2bn a year and would see the incomes of the richest 20 per cent of families rise by £560 a year, while the poorest 20 per cent would benefit by just £80 a year. It would also push 50,000 families into poverty.

The NEF also criticised the home secretary Sajid Javid’s plan to cut the basic rate of income tax below the current 20 per cent. The foundation said this would cost £4.4bn a year for just a 1 per cent cut – a move that would help the richest by £450 a year and the poorest by just £10. Again, 50,000 households would be pushed below the relative poverty line.

During a live BBC debate on Tuesday, and before he failed to gain enough votes in Wednesday’s ballot, Rory Stewart criticised the other candidates for making promises he said they could not deliver, while Michael Gove, the environment secretary, attacked Mr Johnson’s plan to help wealthier earners.

Alfie Stirling, head of economics at the NEF, said: “It’s easy to forget that last night’s TV soundbites could become government policy in a matter of weeks. Committing to cut taxes may sit well with Conservative Party members. But look beneath the bonnet and it is clear that all the proposals being put forward would serve to benefit the very richest more than anyone else.

“Whatever the outcome of Brexit, any of these reforms would leave Britain a more unequal society with higher levels of poverty for both children and adults. For everyone feeling the impact of increased NHS waiting times, overcrowded school classes and unaffordable social care, these tax cuts will come as a double blow: forgoing billions of pounds in revenues that could otherwise have been used to boost public services.”

The NEF said cutting taxes for working people would do nothing to help many of the poorest families in the UK who have little or no income. Income tax and national insurance cuts also disproportionately benefit families with more than one person in work, and which tend to be higher up the income scale, it said.

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