The British government is making a last-ditch bid for votes with a budget giveaway tax cut, one that unfortunately looks to be absolutely dwarfed by the size of tax hikes otherwise.
Live Updates — what’s in the budget?
1240 — Conservative plans mean less immigration. Really?
Hunt goads Labour by saying his plans to increase GDP per capita means being able to grow the economy without relying on unlimited mass migration, which he says the Labour Party supports. Quite the claim given the enormous, historic levels of mass migration experienced by the United Kingdom over the course of the Conservative governments of the past 14 years, particularly given how Hunt and his tribe have insisted immigration is the shortcut to economic growth. Read all about it here.
1233 — Jeremy Hunt is now standing at the dispatch box
The Chancellor has started by saying despite challenging global fiscal headwinds, the UK government has continued to grow, but “of course” interest rates continue to remain high. Cold comfort for homeowners.
Read the context for today’s announcements below:
UK Chancellor Jeremy Hunt has held up the famous traditional red briefcase of state on Downing Street, heralding budget day, where the government sets out its spending and taxing plans for the coming year.
The UK’s Tory government published the Spring Budget, possibly the last major fiscal event before the country goes votes in the General Election this year, with a tuppence-in-the-pound cut to the country’s second income tax already soft-launched. Following years of soaring taxes, largely clawed into the state’s coffers from the income of working Britons through fiscal drag — colloquially best known as ‘stealth taxation’ — Rishi Sunak’s ‘Conservatives’ best hope now is that the economy shows signs of recovery between now and election day — likely to be in the autumn or winter — and that voters don’t look too hard at what’s happened to their tax payments over the past decades, and detect the deception.
WATCH LIVE: Chancellor @Jeremy_Hunt delivers the Spring Budget to the @HouseofCommons. https://t.co/LfmFTO5JYw
— HM Treasury (@hmtreasury) March 6, 2024
As soft-launched on Tuesday by the government, the budget today will include a tuppence cut to the rate of National Insurance (N.I.). This follows another cut to the same tax last year, taking it to four pence in the pound shaved off in the past year. The United Kingdom is somewhat unusual in that is has two national income taxes: while N.I. was originally sold as being levied to specifically fund social spending like pensions, in practice both taxes put money into the general ‘pot’ of government cash and its main purpose now, as widely perceived, is as a convenient figleaf hiding the true level of UK taxation from causal comparison.
Far from this money being saved to pay for future pensions, current taxpayers fund the present generation of retirees, promising a future pension crisis with the UK’s shifting demographics towards a society where, proportionally, fewer work.
As things stand, taxes in the UK are at record highs, scraping the biggest levels seen since the Second World War when much of the economy was nationalised or otherwise directed in a massive effort to support the armed forces. As economic researcher Torsten Bell noted last year of the last attempt to grab headlines with a minor tax cut: “Even after today’s tax cuts, the tax burden reaches its highest level for 70 years – up by well over £4,000 per household since on pre-pandemic levels.”
Much of this increase has been achieved through what is known as stealth taxation, where during times of inflation the fixed income levels where different tax bands kick in don’t rise at the same speed, if at all. Through this artifice, as inflation pushed up the income of ordinary working Britons without increasing their spending power, they are pushed into higher income brackets, and lose more of their income to the government.
Through the slow ratchet of this process — fiscal drag — over long periods of time, huge changes in the way taxation works has been observed. The UK ‘higher band’ of taxation, for instance, was called a tax on the super-rich in the 1980s, but today hundreds of thousands of teachers, police officers, and nurses lose a slice of their income, although they could in no way be considered elite earners.
