In a speech at the University of London's Bayes Business School, Chancellor Rishi Sunak insisted that the ruling Conservative Party remains the party of low taxation, despite his plan to hike National Insurance from April 1 so workers, employers, and the self-employed pay 1.25 pence more on every pound earned.
Sunak said, “I am going to deliver a lower tax economy, but I am going to do so in a responsible way, and in a way that tackles our long-term challenges.” He said tax cuts will only become possible after “hard work, prioritization, and the willingness to make difficult and often unpopular arguments elsewhere” and cannot be made if the government has major spending plans.
Sunak's tax hike comes as UK households face a sharp rise in heating bills because of rises in the price of oil and natural gas, and as inflation, fueled by government spending on the fight against the pandemic and supply-chain challenges, has devalued the money in people's pockets. The tax rise will help fund the under-pressure National Health Service, and pay for improvements to the social care system.
Ironically, the International Monetary Fund added to Sunak's problems this week by saying in its annual review of the UK economy that, while growth should remain strong, 'price pressures and risks' will mount. It said Sunak should, therefore, address 'demand-supply imbalances' by raising taxes on people 'who have benefited most from the pandemic' - a so-called 'windfall on wealth tax'.
