This Will Be The Biggest Tax-raising Parliament On Record

29th September 2023

This has been the biggest tax-raising parliament since records began, pushing UK tax revenues to historically high levels according to a report by the Institute for Fiscal Studies.

At the time of the last general election, UK tax revenues amounted to around 33% of national income. By the time of the next election in 2024, on current forecasts, taxes will amount to around 37% of national income - a level not sustained in the post-war period. Compared with a world in which taxes had stayed at 33% of national income, the UK government will be raising upwards of £100 billion more in tax revenues next year. This is equivalent to around £3,500 more per household, though of course the tax rise will not be shared equally.

The government may decide to announce tax cuts in the run-up to the next election. But there is no world in which this parliament - or indeed the period since Rishi Sunak became Prime Minister - turns out to be anything other than a tax-raising one. In fact, it is currently on track to be the biggest tax-increasing parliament since comparable records began.

Taxes in the UK are heading for an all-time high
The UK government is currently raising more in tax revenue, as a percentage of national income, than at any time since the 1940s (Figure 1). This is, in no small part, due to a raft of tax-raising measures announced over the past few years. Notable examples include the big increase in the main rate of corporation tax from 19% to 25%, the energy profits levy, and freezes to various income tax and National Insurance thresholds. Economic developments mean that some of these measures will now raise considerably more than originally planned or intended. That is particularly true of freezes to income tax allowances (which would otherwise have risen in line with CPI inflation).

Comparing with parliaments of the past
The upshot is that the overall level of taxation will increase by more over this parliament than under any previous parliament since the 1950s (when comparable records began). This is illustrated in Figure 2. Between 2019-20 and 2024-25, tax revenues are set to increase by 4.2% of national income under the latest official forecasts (we return to the issue of recent GDP revisions below). The next-biggest tax-raising parliament was during Labour's first term under Tony Blair (defined here as 1996-97 to 2001–02), when taxes increased by 2.9% of national income.

Read the full report HERE