Newsletter issue – July 2024
You’ve probably heard a fair bit about tax so far in this General Election campaign, with many claims and counter-claims thrown around by the major parties. How do we know what to really make of it? For seasoned political aficionados, it is a familiar story at election time. Do the numbers add up? Can the country really afford the policies that have been put forward?
Well, for one leading independent voice on the economy and taxation, the Institute of Fiscal Studies, not enough has been said in the campaign about the harsh reality facing the UK and the tough decisions that are likely to need to be made - no matter what the party colours of the next Government may be. In fact it has accused the leading parties of a ‘conspiracy of silence’.
In a sobering assessment of the state of the country’s finances, the IFS has suggested the two major parties – Labour and the Conservatives – have been ‘ducking’ the trickiest tax choices that loom. The think-tank said the reality is that there is a ‘toxic mix’ of low growth and stifling repercussions from the Covid pandemic and energy crisis.
Paul Johnson, the IFS director, says that despite the lack of comment and mention in the party manifestos of the toughest decisions, as he sees them, the likelihood is that taxes will need to rise, or public services are likely to worsen.
He told the national newspapers: “The choices in front of us are hard. High taxes, high debt, struggling public services, make them so. Pressures from health, defence, welfare, ageing will not make them easier. That is not a reason to hide the choices or to duck them. Quite the reverse. Yet hidden and ducked they have been.
“They have singularly failed even to acknowledge some of the most important issues and choices to have faced us for a very long time. As the population ages these choices will become harder, not easier. We cannot wish them away.”
Labour has stated that it will not raise income tax, VAT or National Insurance. The Conservatives pledged the same but went further on NI, saying they would continue to reduce NI by a further 2p, whilst abolishing the main NI rate completely for self-employed by the end of the Parliament – a policy that has faced hard questioning.
The manifestos and summaries of tax proposals for all of the major parties standing at the election can be found online, if you want to delve deeper into the details before the vote. We’ll look more closely in the next newsletter at what the likely tax changes will be, once we know the outcome of the election.