In the first week of the New Year there was a story that was widely reported in many of the papers. ‘More and more people pushed into higher rate tax bracket’ ran the headline with – according to which paper you read – either 1m or 1.2m more people are set to pay the 40% rate of tax by 2026.
The story was based on research carried out by the House of Commons library, with the article published in the Daily Telegraph saying that ‘1.2m additional workers’ would find themselves paying the higher rate of tax as a result of the Government’s decision to freeze the personal allowance and the higher rate threshold. In addition, almost 1.5m people would be brought into paying the basic level of income tax.
The research was commissioned by the Liberal Democrats, who claimed that ‘the stealth tax raid’ would ‘clobber families who are already feeling the pinch.’
Coming on top of stories about likely increases in food, fuel and energy prices this was hardly the start to the year hard-pressed families needed.
But perhaps there was some light at the end of the tunnel – because there was another story running over New Year. ‘Sunak gears up to slash taxes’ was the headline in City AM.
‘No surprise there,’ the cynical among you might mutter. ‘One eye on the leadership and one eye on the next Election.’
It’s undoubtedly true that should the PM fall under the proverbial bus the Chancellor – along with Foreign Secretary Liz Truss – would be a leading candidate to replace him. And yes, the next UK General Election will be held in December 2024 or earlier.
Rishi Sunak has always been a politician who has made a virtue of taking difficult – and painful – decisions. Yet, according to City AM, he has told the Treasury to draw up plans to cut income tax by 2p in the pound and/or cut the rate of VAT. Other plans apparently being considered include scrapping the 45p rate of tax (payable on earnings over £150,000), reducing inheritance tax and households that use green energy potentially paying lower rates.
Rishi Sunak says he does not want to be seen as a ‘high tax, high spending’ Chancellor. At which point the cynical will add, ‘Ah well, you can’t trust politicians anyway.’
Maybe we can…
Surprisingly, trust in politicians actually increased in 2021 with the annual Ipsos MORI veracity poll for the year showing that 19% of the public now say they trust politicians, up from 15% in 2019. That said, politicians are still well down the ‘trust league table,’ which is headed by nurses and librarians with 94% and 93% respectively. Who is below politicians? Advertising executives get the wooden spoon in the trust stakes.