[ad_1]
Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Most British voters expect their taxes to go up after the UK general election whichever of the two main parties wins on July 4, despite efforts by the Conservatives and Labour to play down the prospect of hikes.
A poll by Ipsos for the Financial Times showed 56 per cent expected Sir Keir Starmer’s Labour party to raise taxes, and 52 per cent said the same of Prime Minister Rishi Sunak’s Conservatives.
The findings point to the public’s scepticism about promises both parties have made to not raise any of the three biggest levies — income tax, national insurance, and VAT — that account for much of the government’s revenue.
Leading economists have warned that whoever wins the election will have to grapple with the UK’s stretched government finances and severe pressure on public services, making it hard to avoid raising revenue and harder still to cut taxes.
The poll also found that slightly more voters would prefer higher spending on public services over personal tax cuts, with 37 per cent opting for spending against 30 per cent for lower taxes. The remainder expressed no preference. Voters who backed Labour in 2019 were significantly more likely to prioritise spending than those who voted Tory, the poll showed.
The UK tax burden has risen since the 2019 election and tax as a share of GDP is forecast to hit 37.1 per cent in 2028-29, up four percentage points from before the Covid-19 pandemic. The Institute for Fiscal Studies has said the current parliament has been one of “record tax rises”.
Although chancellor Jeremy Hunt has delivered successive cuts to national insurance contributions since November 2023, millions of people are paying more in tax overall because of a freeze in the thresholds for each income tax band.
On Thursday both Hunt and Starmer suggested they would leave these thresholds frozen after the election, meaning yet more people would be dragged into paying tax or into higher brackets as their incomes increased, even if they only rose in line with inflation.
These comments cut against the broader efforts by both parties to persuade the public that they will not push the tax burden higher.
Labour shadow chancellor Rachel Reeves has been at pains to quash speculation that her party would increase taxes beyond a handful of limited measures such as introducing VAT on private school fees.
Sunak is also attempting to put forward a tax-cutting agenda, proposing a £2.4bn-a-year measure to unfreeze the size of the tax-free personal allowance only for pensioners.
The IMF this month warned of a £30bn gap in the UK’s public finances because current plans underestimated how much public spending would occur in the years to come.
It set out a number of revenue raisers including higher carbon and road taxes, broadening the base on which VAT and inheritance tax are levied, and reforming capital gains and property taxation.
The IMF also said the overall public spending plans pencilled in by Hunt — and adopted by Reeves — were too low given the demands on public services.
These plans envisage 1 per cent real-terms annual departmental spending growth, but the IMF said a growth rate of 2 per cent was more likely.
Labour currently leads the Tories by around 20 points in polling, according to the FT’s poll tracker. The Ipsos poll suggested many Labour supporters were motivated by a desire to oust Sunak’s party rather than enthusiasm about Starmer’s offer to the country.
Asked their most important reasons for backing Labour, 57 per cent of potential Labour voters selected “Britain needs a change”, while 53 per cent said Labour would be better on the NHS and healthcare.
The third most popular response, selected by 46 per cent, was simply that Labour were the most likely to oust the Conservatives.
Additional reporting by Delphine Strauss
[ad_2]
Source link
