Jeremy Hunt's stealth taxes: Chancellor to rake in extra £120BILLION from hard-working Britons after Budget
Published: 16/03/2023- 10:29
Updated: 16/03/2023- 10:31
Millions of Britons will be dragged into paying more income tax as the Government earns an extra £120billion over the next five years, according to latest Budget forecasts.
In the current financial year, the Treasury is on course to hit more than £1trillion in tax.
The tax band thresholds have been frozen meaning that even though wages are not rising enough to get up with cost of living, many people are still being pulled into higher bands.
In five years’ time, 3.2million employees previously not liable for income tax will be required to pay it, while 2.5 million are pulled into higher brackets.
In five years’ time, 3.2million employees previously not liable for income tax will be required to pay it
Hunt’s Budget is helping to balance the books, but only by a “wafer thin” margin, according to the Government’s fiscal watchdog.
The tax burden is set to hit 37.7 per cent of GDP, which is the highest level since World War two, according to the Office of Budget Responsibility (OBR).
The rise is partly the result of the corporation tax rate going up in April from 19 to 25 per cent, despite calls from business leaders and Tory MPs to scrap the rise.
Under the “personal allowance”, anyone earning less than £12,570 does not have to pay income tax.
But the freeze means that if wages climb above this, they will be liable to pay 20 per cent tax.
OBR analysis shows the freezes will add £12billion in tax over the 2023/24 financial year, rising to £29.3billion by 2027/28.
According to the OBR, Hunt is on course to meet the Government’s target to see debt as a percentage of GDP falling in five years’ time, but only “by only the narrowest of margins”.
The expected “headroom” of £6.5billion will be the lowest for any Chancellor since the watchdog was launched in 2010.
The tax burden is set to hit 37.7 per cent of GDP, which is the highest level since World War two
Debt interest spending is set to hit £114.7billion, or 11.2 per cent of GDP, in 2022/23.
This is due to the interest paid on the Government’s debt is linked to inflation.
Paul Johnson, director of the Institute for Fiscal Studies, said: “The Government remains on track to meet its relatively loose fiscal targets by only the barest of margins, despite a historically high tax burden and some extremely tight post-election numbers for spending on public services.
‘We are still in the midst of an enormously difficult period for households. We’re by no means out of the woods yet.’