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Finer details in the Chancellor’s budget statement reveal that taxes will rise, incomes will fall, and the young and poor will pay the price
The Chancellor today claimed to be cutting taxes while protecting the living standards of working people.
“This statement puts billions back into the pockets of people across the UK and delivers the biggest net cut to personal taxes in over a quarter of a century,” Rishi Sunak told the House of Commons.
The reality, as figures from the Government’s own Office for Budget Responsibility show, is quite different.
Taxes Will Go Up, Not Down
Sunak has gathered a series of headlines over the past week for his claimed “mission” to cut taxes. The reality is quite different.
Even before today’s statement, he had presided over the largest rise in taxes of any chancellor in almost three decades.
And while he did announce some tax cuts today – on the basic rate of income tax and the threshold for National Insurance – the overall picture is that he plans to raise taxes even more than he has already.
According to the Government’s own Office for Budget Responsibility (OBR), the Chancellor will raise the overall tax burden in the UK to its highest level since the 1940s.
Even on Sunak’s headline income tax cut, he declined to mention that his decision last year to freeze income tax thresholds means that the Government will actually increase the overall amount it collects in income tax due to so-called fiscal drag pulling more people into higher income tax bands.
Living Standards Will Fall
Sunak also claimed today to be “rewarding work” while protecting household incomes.
The reality, as the OBR points out, is that overall living standards are set to fall by 2.2% in real terms over the next year – the largest fall on record – and are not set to recover to pre-pandemic levels until two years later.
Sunak Will Fail to Help the Poorest
The Chancellor today boasted of giving “security for working families as we help with the cost of living”.
However, in reality, there is little to help those who are at the sharpest end of the growing cost of living crisis. By definition, his cut to basic income tax wil