Conservative Government Claims They Are Low Tax But The Truth Is Taxes At Highest Levels Since WW2

5th June 2024

The Institute for Fiscal Studies report looking at the economy 2010 - 2024 nails it once again - taxes are higher than ever under the Conservatives. The National Insurance cuts are outweighed by freezing allowances until 2027/28 - so called Fiscal Drag

The biggest tax rise of the 2019 to 2024 parliament, though, came about through the freezing of income tax and National Insurance thresholds, initially for four years (announced by Mr Sunak as chancellor in 2021) and extended to six by Mr Hunt. In an era of high inflation this now looks set to be a £40 billion a year tax rise. It will undo two-thirds of the increase in the income tax personal allowance which was such a centrepiece of the coalition's tax policy between 2010 and 2015, and will result in a near doubling of the number of higher-rate taxpayers.

In a final twist in November 2023, Mr Hunt announced a cut in National Insurance from 12 to 10 per cent, more than reversing the increase put in place by Mr Osborne in 2011. Despite costing £10bn, this tax cut is far smaller than the amount raised by freezing personal tax thresholds through fiscal drag.

The overall effect of these policies will be to take tax as a fraction of national income to its highest ever level. The 2019-24 parliament will see taxes rising by more than any other parliament since at least 1950. Elevated debt - and with it debt interest spending - slow growth and pressure to spend more on health, pensions, defence and many other areas of public provision, suggest to us that this high level of tax is here to stay.

[url=https://ifs.org.uk/publications/conservatives-and-economy-2010-24]The full report -The Conservatives and the Economy, 2010-24[/url]