The Institute for Fiscal Studies reports today that this parliament will be the most tax-raising on record. From 2019-20 to 2024-25, tax revenues will increase by 4.2% of the national income, a 30% steeper rate than the next-biggest tax-raising period during Tony Blair’s first term. The IFS report notes “economic developments” have additionally increased tax take, in particular from frozen allowances and stealth tax rises. Inflation is taxation without legislation…
The IFS claims that overall taxation is “middling” when compared to other developed countries but ignores the fact that the UK has increased tax as a proportion of GDP and government spending by more than all major European economies since 2000. Feeding the beast…
Eyebrows will be raised at Tory conference this weekend when Hunt claims that tax cuts are “virtually impossible” while borrowing and inflation are lower than expected. Guido recommends Hunt looks at getting rid of some of the 133,000 new public sector staff hired this year alone…
Keir Starmer’s 20% VAT on private schools is against EU law that’s still part of UK legislation. A 2006 European Council directive on the tax specifically exempts “the provision of children’s or young people’s education, school or university education” and related goods and services. A Starmer government would it seems have to remove the provision from UK law. So much for not “diverging“…
With the Autumn statement set for November 22nd, the Treasury has been stepping up their preparations ahead of the big day, and although Number 10 has made headlines briefing in advance that inheritance tax is to be scrapped, the briefings might not be all they seem. Guido’s aware of a Treasury document in circulation with discussion points surrounding the policy. The briefing was on the topic of ‘closing the inequality wealth gap’… not something that often motivates people to vote Tory.
Although abolishing inheritance tax did get a mention, alongside additional penalties for the evasion of business rates and council tax, it was another bullet point which caught Guido’s attention. The Treasury is discussing increasing capital gains tax on property.
Rachel Reeves has even said Labour have “no plans” for either a wealth tax or capital gains rise – Guido’s starting to see why they’re 20 points ahead in the polls. The scrapping of inheritance tax was mulled as a pitch to Tory-leaning voters. If it’s coming with an increase in property taxes it certainly won’t win back voters in the Blue Wall. Or any Tory seat for that matter…
UPDATE: Treasury source insists this “ain’t happening” and this is not where the Chancellor’s head is at.
Happy cost of government day! Yes today’s the day, after seven and a half months of hard graft on behalf of the Treasury, the state finally stops consuming all the money you will earn. This year’s date of August 15th is the latest Cost of Government Day* on record, meaning the state has cost more this year than in any previous year – even during the pandemic. Workers will see over 60% of their 2023 income paid to the state…
Cost of government celebrations come courtesy of research from the Adam Smith Institute. Their research director, Maxwell Marlow, said:
“This is an unsustainable situation, especially as poor private sector investment continues to cripple the long-run health of the economy… We need urgent fiscal reform. Taxes must be cut, regulations must be slashed, and we must free-up our sclerotic planning system to allow for growth and extensive housebuilding to give young people a fairer chance.”
If only we had a government willing to make supply-side reforms…
*Tax Freedom Day fell on June 18th with taxpayers forking out over £901.8 billion to the Treasury this year, 46.25% of net national income. Cost of Government Day, which factors in borrowing as well taxes, is today.
Just seconds after claiming Labour’s “enormous discipline” means its spending commitments “have all been costed“, Shadow Attorney General Emily Thornberry forgot what her party’s tax policies actually are. Appearing on Politics Live this afternoon alongside Tory MP Kevin Hollinrake, Thornberry insisted Labour “don’t make an announcement without being able to show where the money comes from” – only to then admit she “can’t remember” where they’ll find £22 billion for small businesses…
Thornberry: “The idea is that we redistribute taxation from the larger businesses to the smaller businesses, so what we’re going to do, we’re going to stick with the taxes for the larger companies…”
Hollinrake: “Which taxes?”
Thornberry: “… I can’t remember exactly which ones it is now. I think it’s the highest… higher business taxes, and so businesses of a certain size will continue to be able to pay that higher amount, and that money will be transferred to smaller businesses…”
She then claimed Hollinrake “really needed to pay more attention“. Apparently Labour are committing to higher businesses taxes now. Does Rachel Reeves know about this, or does she need to pay more attention as well?
Just two weeks have passed since Rachel Reeves assured that Labour has “no plans” to raise capital gains tax because, for some families, capital gains “is their retirement” after they have “built up a business”. It was a deliberate attempt to save face after Deputy Leader Angela Rayner went off-script, claiming capital gains should go up. She’s just done it again this morning.
Appearing on the Today Programme, Rayner suggested Labour may raise capital gains tax after all, adding she would “like to see our tax system fairer for working people”. Presumably this is the strategy now: Rayner and Reeves talk to different audiences, telling both groups what they want to hear, and hope one doesn’t listen to the other. If they get elected, everyone can be disappointed.
Just minutes after Rayner advocated raising taxes, Keir Starmer posted a tweet condemning the Tories for “rais[ing] taxes 24 times this Parliament”, and again trotted out the pointless claim that Labour would “freeze council tax this year” – something they have already admitted is just a hypothetical, and they might not do it if they actually win in 2024. This, apparently, is what a government-in-waiting looks like…
