Britons hit with £30billionn stealth tax raid under Rishi Sunak’s plans: ‘Taxes will rise!

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The Institute for Fiscal Studies (IFS) is sounding the alarm that Britons are losing out due to the UK’s soaring rate of inflation and the former Chancellor’s decision to freeze tax thresholds. Experts are warning that this has resulted in a stealth tax raid as more people are being pushed into higher income tax brackets as their pay rises. Last year, Mr Sunak made the decision to freeze tax allowances, which are usually aligned with inflation, until 2026.

This staggering £30billion tax raid on working people’s incomes is nearly four times as much as the Government was expecting to make from the tax freeze.

Rishi Sunak is currently up against Liz Truss in the leadership contest for the Conservative Party.

According to the IFS, this £30billion will decimate any potential gains from tax cuts promised by Ms Truss during her campaign.

The Foreign Secretary has promised voters she will scrap the hike to National Insurance payments which were introduced by Rishi Sunak earlier this year.

READ MORE: State pension set to rise next year but 520,000 people will miss out

Currently, both candidates are attempting to convince Tory members that their tax plans will be the best to get the country out of the cost of living crisis.

Inflation in the UK is currently at 9.4 percent and is expected to exceed 13 percent in the coming months.

On top of this, energy bills are skyrocketing to record levels and are forecast to reach £4,200 a year by January 2023.

In light of this, the IFS is calling for a further review of Mr Sunak’s tax raid instead of cutting rates as this will do more to boost peoples’ incomes.

Paul Johnson, the director of the IFS, noted that Liz Truss’ plan to scrap the National Insurance rise will not do much to stop people from paying more tax.

Mr Johnson said: “Even if the new Prime Minister were to undo the (National Insurance) rise, overall taxes on income would still rise under current policy.”

Ben Zaranko, a senior economist at the IFS, called for tax thresholds to be raised in a bid to support those on lower incomes.

Mr Zaranko explained: “By cutting the rate of National Insurance contributions, while simultaneously raising tens of billions more than initially expected from a freeze in income tax thresholds, the Treasury would effectively be giving with one hand while taking with the other.

READ MORE: Britons in higher bracket can do 2 main things to reduce tax payments

“If seeking to help low-to-middle income households through the tax system, it would make far more sense to increase thresholds, rather than cut rates.”

The tax expert warned whoever the next Prime Minister is will have to deal with the consequences of inflation-hiked prices which will hurt Government .

He added: “There are some tough choices to be made. Do they cut back on headcount, do they provide worse services to communities.

“In terms of the NHS, do they delay setting up hospitals? Or throw back waiting list times? Higher inflation means the reality is the same amount of money just doesn’t go as far.”

Both Rishi Sunak and Liz Truss have pledged to tackle the soaring inflation rate in their campaigns.

A spokesperson for Mr Sunak said: “Rishi’s priority is to grip inflation, grow the economy and then cut taxes.”

A spokesman for Ms Truss’s campaign said: “Through her bold plan for the economy, Liz will turbocharge economic growth and deliver the business investment we need to fund quality public services and level up the country.”

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