Despite promising huge tax reduction from the dispatch box, Jeremy Hunt will preside over an eye-watering increase in stealth taxes.
While the Chancellor acknowledged a significant reduction in National Insurance rates, from 12% to 10%, the Treasury is collecting billions through a policy of “fiscal drag.”
The government is now accused of “taking with one hand and giving with the other,” as stealth taxes would discreetly line the taxman’s pockets to the tune of tens of billions of dollars.
Rishi Sunak declared in March 2021 that tax thresholds would be frozen for four years, which Jeremy Hunt extended until 2027-28.
As a result of the programme, millions of taxpayers will be forced to pay higher tax rates as their salaries rise.
According to the small print of the Autumn Statement, released by the Office for Budget Responsibility, the tax threshold freezes would require roughly four million more British taxpayers to pay income tax.
Meaning, three million more Britons will be forced to pay the higher rate of income tax, with 400,000 more paying the highest 45 percent additional rate.
With 68 percent more taxpayers already paying the 40% rate, the Treasury’s revenue from the stealth tax will total a stunning £44.6 billion by the conclusion of the OBR’s prediction in 2028-29.
This figure represents a massive rise of £13.6 billion since the OBR’s last prediction in March of this year.
While Jeremy Hunt promised a lowering in the basic rate of National Insurance, the primary threshold freeze will only have a £180 million impact.
According to the OBR, frozen thresholds are “the largest contributor to the rising overall economy-wide tax burden” and account for about one-third of the 4.5 percent GDP rise in taxes since 2019.
While the Autumn Statement reduces the overall tax burden by 0.6 percent, the overall tax burden has increased by 4.5 percent since Rishi Sunak took office in March 2020.