UK ‘Conservatives’ Make Fake Tax Cut Their Election Offer

LONDON, UNITED KINGDOM - NOVEMBER 22: Britain's Chancellor of the Exchequer Jeremy Hu
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Oliver JJ Lane

British Chancellor Jeremy Hunt delivered an upbeat message in Parliament at the Wednesday Autumn statement, bragging of tax cuts while failing to mention they are massively outweighed by the huge scale of tax rises in recent years.

Workers in the United Kingdom generally pay two taxes at the same time on their income, known as Income Tax and National Insurance which were both established for historically different reasons but have now essentially lost all distinction and only really serve to obfuscate what the true taxation level is. It is the second and smaller of these taxes, National Insurance Contributions, that the Conservative Government of Rishi Sunak has said it will cut on Wednesday morning.

Addressing Parliament, the British finance minister — Chancellor of the Exchequer in British English — criticised without irony the left-wing opposition on both its economic record and attitude towards mass migration despite his Conservative party’s appalling performance on both. Revealing his pre-election giveaway in a bid to build enthusiasm among his own voters, the chancellor announced a two-penny in the pound cut in National Insurance for employees.

This two per cent cut, he said, would save £450 ($560) a year for a worker on an average salary of £35,000 ($43k) a year. In all, it comes to a tax clawback for the average worker of just £8 ($10) a week. 27 million people are employees eligible for the cut, the Chancellor said.

Yet despite the apparent generosity, which Hunt asserted was possible because of his responsible stewardship of the economy, some pointed out the ‘cut’ was actually massively outweighed by how much taxes have gone up otherwise. His opposite number in the Labour Party, who hope to take power in next year’s national elections, said: “nothing that has been announced today will remotely compensate… taxes eating into wages”.

Shadow (opposition) Chancellor Rachel Reeves continued in her response to the announcement that: “…the government had already put in place tax increases worth the equivalent of 10 pence in national insurance. So today’s two pence cut will not remotely compensate for the tax increases already put in place by this conservative government. The fact is taxes will be higher at this election than it was at the last. ”

Indeed, as previously reported the United Kingdom is straining under the highest tax burden since the end of the Second World War. Yet the opposition offers no improvement, with the British quasi-two-party system essentially offering high taxes or high taxes as a choice to voters.

There was also no mention of dealing with frozen taxation thresholds — an important issue normally, but absolutely crucial during a period of high inflation — which means more and more workers are to be dragged into paying higher rates of tax through no fault of their own. This process, often called stealth taxes, is achieved by the government having the levels at which workers go from being basic to higher-rate taxpayers stationary while everyone’s income drifts upwards with inflation.

While the impact is gradual and generates fewer headlines than an outright tax rise, it impacts the lives of working families enormously over time and has a permanent, ratchet effect on taxation through a process called fiscal drag. As long reported, but barely discussed in Westminster, super-taxes introduced decades ago and sold to voters on the principle of being a fair extra levy on the very wealthy are now charged on middle and upper-working-class professions like nurses, teachers, and doctors.

As reported earlier this year:

The impact of this, which has been going on for decades but has reached “totally unprecedented” levels under the present Conservative administration, is best seen in the upper tax bracket, which was first created decades ago to punish the super-wealthy. Today, a failure to adjust the threshold as inflation soars has seen upper-working and middle-class occupations like teachers, nurses, and police officers dragged into the punishment band.

As late as 2003 not a single nurse in the UK paid tax in the top band, but a decade later tens of thousands did, and now hundreds of thousands do. Nurses are not meaningfully any wealthier in 2023 than 20 years ago, but they are taxed more.

By 2028, it is thought a fifth of all taxpayers will be paying the 40 per cent higher tax rate once meant only for the very wealthy.

In Parliament today while inadvertently further underlining that false choice voters will have at the ballot box next year, the Chancellor accented his new policies to increase apprenticeships by taking a shot at the Labour opposition over what he alleged were differences in the views between the parties on how to fill work vacancies. He said that Labour: “would prefer to fill those vacancies in a different way. They hanker after a more liberal immigration regime. Or even dream of bringing back free movement.”

Of course, while immigration had indeed soared under the last Labour government, that does nothing to detract from the fact it has reached further historic highs under the Conservative’s 13 years in power. In fact, migration is now at an all-time high thanks to the government’s work to liberalise border controls.

Indeed, forecasts published this week show net migration to the United Kingdom could yet again hit an all-time high this year and go as high as 700,000. The figure, which is achived by subtracting the number of people leaving the country from those arriving, means the population increase just from migration alone could be over one million people in just two years.

 

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