Stealth tax on income will stay until 2028 if Conservatives are re-elected, admits Jeremy Hunt
Stealth tax freezes on income tax thresholds will stay until 2028 if the Conservatives are re-elected, Jeremy Hunt has admitted.
The Chancellor went on the attack against Labour, claiming if Sir Keir Starmer gets into No10 he may hike VAT.
Such a move was swiftly ruled out by shadow chancellor Rachel Reeves.
Mr Hunt also said the Conservatives would not raise the income tax rate, National Insurance or VAT.
But he admitted that the freezes on income tax thresholds, introduced after the public finances were rocked by the Covid pandemic, will remain in place until 2027/2028.
He told BBC Radio 4’s Today programme: “The tax rises that happened as a result of the pandemic and the energy shock, these two giant shocks, will stay for their allotted time period.”
In a wide-ranging interview in The Standard, Mr Hunt stressed that the Tories would defend the so-called Blue Wall in southern England “brick by brick” including Godalming and Ash where he is standing.
But the Chancellor lopped 2p off National Insurance in both of the spring Budget and the last Autumn Statement.
London households’ disposable income will rise £110 on average this year once the National Insurance cuts and stealth taxes are taken into account, according to official figures.
But it will then fall by £10 the following year, by £110 in 2026/27 and £230 in 2027/28, as the Chancellor’s stealth taxes bite deeper.
Labour has not said that it would end the stealth tax freezes on income tax thresholds.
In the row over VAT, Mr Hunt told The Telegraph: “I can commit today that, not only will a future Conservative government not increase any rate of income tax or national insurance, but we won’t increase the main rate of VAT for the duration of the next Parliament.”
He urged Sir Keir to make a similar commitment “on camera”.
Mr Hunt wrote: “A VAT increase will hammer families’ finances and push inflation back up, just when we have got it down to normal.”
UK inflation slowed to 2.3 per cent in April, the lowest level since July 2021 and near the Government’s two per cent target, according to the latest figures.
The Conservative Party’s new poster bears a giant red piggy bank bearing the words: “If you think Labour will win, start saving...”
It claims Labour’s fiscal plans would cost working families £2,094.
But Ms Reeves said Mr Hunt’s words were “absolute nonsense”.
She added: “Labour will not be increasing income tax, national insurance or VAT.
“I want taxes on working people to be lower, not higher.”
Her party claims the Conservatives have a spending black hole in their plans worth £71 billion.
Both parties are making their General Election pledges against a challenging backdrop.
The Institute for Fiscal Studies said the next UK government will face the toughest fiscal inheritance in 70 years.
