The papers are full of kites flying various stealth taxes that Rishi is rumoured to be considering. This game is a pre-budget ritual, anonymous sources float horror stories in the papers about the slaughter of the firstborn sons and then voters are relieved when it is only the removal of child benefits from middle-classes mothers.* We can see this being played out in the papers currently.
Rishi is boxed in by the Conservative Party’s 2019 manifesto which promised no increases in income tax, VAT or National Insurance rates. Pandemic spending means that debt is rising and Rishi wants to signal it will have to be repaid. So like Gordon Brown he is contemplating stealth taxes. The press have flown the following as kites:
- A pension raid will see punitive taxes on pension pots over £1 million. Given people will now live longer that will bite on those who have planned for their retirement. This ground has been pre-rolled with friendly think-tank collaborators – so this is likely.
- Freeze the £50,000 higher rate income tax threshold. Creating 800,000 new overtaxed workers for what was supposed to be a tax on the rich, not the middle-classes. Ignore rumours that Rishi will freeze the lower-rate threshold. That is a bluff.
- Briefings about plans to increase corporation tax from 19% to 25% over the course of this parliament could be a bluff. If so it is one the Labour Party have fallen for, they oppose any hike as a tax on jobs. Kier’s Taxpayers Alliance membership card is in the post.
The Conservatives have already lost their ideological ability to paint their Labour opponents as Magic Money Tree farmers, given they have given the Magic Money Tree such a big shake themselves. They will lose their reputation as a low-tax party too if they go too far down this path. Rishi’s slick photoshopped imagery will not see him forgiven by the true blue wing of his party if he does turn them into a party of high taxes and high spending. It won’t do his leadership prospects much good.
*The “party of the family” actually did that, child benefit was effectively a small tax-rebate for higher-rate tax-paying mothers. The Tories effectively removed that and now they only offer financial incentives to people who can’t afford to have children, to have children.