Chancellor of the Exchequer Rishi Sunak has presented his budget which he says delivers on the Tories’ pledge to cut taxes for working Britons by increasing the income tax threshold, abolishing the Tampon Tax and Reading Tax, and freezing duty on fuel and alcohol.
Mr Sunak reminded the House of Commons that next month sees the increase of the National Living Wage by 6.2 per cent — what the government said in January represented “the biggest cash increase ever” — and revealed that his government had pledged the NLW will increase to over £10.50 an hour by 2024.
“As people earn more, we’ll also cut taxes on their wages,” Mr Sunak continued, adding that in four weeks, the national insurance threshold will increase from £8,632 to £9,500 per annum.
“That’s a tax cut for 31 million people, saving a typical employee over £100. Taking together the changes to the national living wage, income tax, and national insurance, that means that someone working on minimum wages will be £5,200 better off than in 2010” he said, calling the Conservatives, “the real workers’ party”.
But the budget had bad news for taxpayers further down the line, as borrowing is set to increase, from 2.1 per cent of GDP today to 2.8 per cent by 2022.
–Duties frozen on fuel and alcohol–
Last week, media were reporting that the Chancellor was considering lifting the freeze on vehicular fuel duty, meaning a rise of 2p a litre on petrol and diesel. Facing a backlash from MPs who warned that raising taxes for drivers for the sake of environmentalism would hurt the working classes worst of all, the alleged plans appear to have been scrapped, with Mr Sunak instead announcing a freeze on fuel duties for the tenth year in a row.
The Chancellor said: “I’ve heard representations that after nine years of being frozen, at a cost of £110 billion to the taxpayer, we can no longer afford to freeze fuel duty. I’m certainly mindful of the fiscal cost and the environmental impact. But I’m taking considerable steps in this budget to incentive clean forms of transportation and many people still rely on their cars, so I’m pleased to announce today that for another year, fuel duty will remain frozen.”
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He also announced that a planned increase on spirit duty will be cancelled, as well as on beer, wine, and cider. Acknowledging that Britain’s pubs are under threat, he would increase the discount in rates for small pubs from a proposed £1,000 to £5,000 for this year in order to support establishments that are “at the centre of community life”.
The Chancellor of the Exchequer said: “Wages: up; national insurance: cut; tampon tax: abolished; spirits duty: frozen; beer duty: frozen; wine and cider duty: frozen; fuel duty: frozen. We promised to cut taxes and the cost of living and we got it done.”
–Sunak abolishes the Reading Tax–
As well as abolishing the tax on women’s sanitary products from January 2021, Mr Sunak said that from December 1st, he will be scrapping VAT currently charged to digital publications (printed publications are tax-exempt).
“Today, I’m abolishing the reading tax,” Sunak said. “Just in time for Christmas, books, newspapers, magazines, or academic journals, however they are read, will have no VAT charge whatsoever.”
Mocking his counterpart in the opposite benches, he continued: “There will be no VAT on historical fiction by Hilary Mantel, manuals or textbooks like Gray’s Anatomy, or works of fantasy, like John McDonnel’s Economics for the Many.”
“The irony is, it sold so few it is literally his own ‘little-read book’,” he added.