Brits brace for the biggest tax burden since World War Two
Brits brace for the biggest tax burden since World War Two: Jeremy Hunt’s November budget ‘set to add £25BILLION in hikes’ as new Chancellor battles to fill £50bn black hole in public finances
- Chancellor Jeremy Hunt’s first budget will include 50 per cent tax rises and 50 per spending cent cuts
- Prime Minister Rishi Sunak said a ‘difficult’ package was necessary to restore market confidence
- George Osborne balanced his austerity budgets settling on 80 per cent spending cuts to 20 per cent tax rises
The tax burden will hit yet another record high as Jeremy Hunt’s Budget next month is set to add another £25billion in hikes.
The planned Halloween Budget has been delayed to November to allow Rishi Sunak to get ‘under the bonnet’ of proposals to close a hole in the public finances said to be ‘north of £50billion’.
Mr Sunak yesterday said the ‘difficult’ package was needed to restore market confidence in the public finances and ‘limit as best as possible the increase in interest rates’.
A government source said Mr Hunt was targeting a 50:50 split between spending cuts and tax rises, meaning £25billion in hikes.
Prime Minister Rishi Sunak, pictured with his chancellor Jeremy Hunt, right, are working on an emergency budget which is set to send the tax burden rocketing to WWII levels
Mr Hunt, pictured, was appointed by the former Prime Minister Liz Truss, just days before she was forced to resign
Mr Hunt has already announced £32billion in tax rises as he sought to reassure the financial markets that the situation would be brought under control following the sacking of his predecessor Kwasi Kwarteng
By contrast, George Osborne’s austerity package after the financial crash was 80 per cent spending cuts and 20 per cent tax rises.
Mr Hunt has already announced £32billion in tax rises as he sought to reassure the financial markets that the situation would be brought under control following the sacking of his predecessor Kwasi Kwarteng.
Taken together, the UK now faces an extra £57billion in taxes, far outweighing the £45billion of tax cuts in Mr Kwarteng’s mini-Budget. The tax burden is already on course to hit 36.3 per cent of GDP by 2025 – up from 33.1 per cent last year, and the highest level since the 1940s. Last year, the total tax paid in the UK was just over £718billion – versus £315billion at the turn of the century.
Speaking on a visit to a hospital in Croydon yesterday, the Prime Minister said he would act to ‘protect the most vulnerable’ as he tightens the nation’s belt. But he said the eye-watering package was necessary to bring inflation under control and limit the looming rise in mortgage payments.
‘The Chancellor has already said difficult decisions are going to have to be made and I’m going to sit down and work through those with him,’ he said.
‘But what I want everyone to know is that we need to do these things so that we can get our borrowing and debt back on a sustainable path. That’s important because it means that we can get a grip of inflation if we do that. It means we can limit as best as possible the increase in interest rates, which is important.
‘But as we do that, I want people to be reassured we will always do it with fairness at the heart, we will protect the most vulnerable and ensure that we can continue to grow the economy in the long run.’
Mr Hunt is expected to pledge that the Government will get the debt mountain falling within five years. The Chancellor is already looking to extend a four-year freeze on income tax by two years, despite warnings it will see millions more dragged into the 40p tax band.
He is also looking at extending the windfall tax on oil and gas firms for a further two years, and is considering a new levy on major banks who are poised to make bumper profits from interest rate hikes.
Speaking on a visit to a hospital in Croydon yesterday, the Prime Minister said he would act to ‘protect the most vulnerable’ as he tightens the nation’s belt. But he said the eye-watering package was necessary to bring inflation under control and limit the looming rise in mortgage payments’
Mr Sunak said: ‘The Chancellor has already said difficult decisions are going to have to be made and I’m going to sit down and work through those with him’
And the Treasury is expected to look again at whether to cut pension tax relief for higher earners and suspend the triple lock, which could be abolished after 2025. Mr Hunt and the Treasury Chief Secretary John Glen will write to government departments next week asking them to set out proposals for major savings. Sources said even the NHS and defence budgets will not be immune.
The Budget delay has prompted speculation that the size of the black hole could be reduced by recent falls in the cost of government borrowing. But sources played this down, saying the PM and Chancellor wanted to build in a buffer of at least £10billion.
‘It’s looking like the gap we need to fill will be north of £50billion in the end,’ a source said. Higher taxes may alarm Tory MPs and business – and renew fears of a recession.
Former minister Sir John Redwood said: ‘The cruel paradox is this. Tightening too much now, whether by hiking taxes or cutting public services, could create a recession. In a recession, deficits rise and the state has to borrow more, not less. It would not be a good idea to follow the wrong response to current economic conditions in pursuit of a lower number for three years’ time which no one can accurately predict nor deliver.’
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