UK’s high-tax economy will cost households more than £ 3,000 a year
Boris Johnson is set to preside over a 3,000-pound ($ 4,130) tax increase per household by 2027 as part of the government’s new vision of “big state” conservatism, according to the Resolution Foundation.
Exchequer Chancellor Rishi Sunak’s budget on Wednesday included policies that reward low-income workers but raise taxes for middle- and high-income households, the think tank said Thursday. Add to that the impact of rising inflation, and household incomes are expected to stagnate, Resolution said.
These measures, which come with large spending increases, will anger many conservative lawmakers, who favor low taxes and a smaller state. While Sunak said he believed there were limits to what the government could do, and insisted on Thursday that he was “uncomfortable” with the current level of taxation, its budget raised taxes in proportion to the size of the economy to the highest since the early 1950s.
Sunak’s decisions, including the recent increase in national insurance, a payroll tax, came despite a more favorable economic outlook that has significantly improved the outlook for public finances. Much of the extra money was used to increase funding for utilities ravaged by the pandemic.
This leaves the UK on track to become a high-tax economy, rather than the high-wage one Johnson promised, Resolution said, predicting that “the UK is still in the middle of its weakest decade for wage growth since the 1930s ”.
“The tax hike is no surprise given that the UK is combining fiscal conservatism with an aging society and a slow growing economy,” said Resolution Managing Director Torsten Bell. “But this is the end of low fiscal conservatism.”
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