For free real time breaking news alerts sent straight to your inbox sign up to our breaking news emails Sign up to our free breaking news emails
Please enter a valid email address
Please enter a valid email address
SIGN UP
I would like to be emailed about offers, events and updates from The Independent. Read our privacy notice
Thanks for signing up to the
Breaking News email
{{ #verifyErrors }} {{ message }} {{ /verifyErrors }} {{ ^verifyErrors }} Something went wrong. Please try again later {{ /verifyErrors }}
Jeremy Hunt’s tax giveaway is based on “implausible” plans to cut public spending and will not prevent this from being the “biggest tax raising” parliament in recent times, economists have said in their assessments of the autumn statement.
The Chancellor used his Commons statement on Wednesday to begin to ease the historically high tax burden and announce tighter welfare rules and further measures aimed at getting more people into work.
Mr Hunt said a stronger outlook for the public finances meant he could slash the 12% national insurance rate to 10% and offer firms incentives to increase investment.
The giveaways announced today are funded by handing whoever wins the next election implausibly large spending cuts
Torsten Bell, Resolution Foundation
But the Office for Budget Responsibility’s predictions painted a picture of anaemic growth for the next three years.
RECOMMENDED
Trump attacks judge and clerk again in ‘Happy Thanksgiving’ post: Live
Undo
Princess Eugenie reveals difficulties with appearance due to public scrutiny
Undo
Navy Quest Game
Play this game for 1 minute and see why everyone is addicted.Navy Quest Game| Sponsored Sponsored
Undo
Techno Mag
Only $49 to get all the TV channels? It's now possibleTechno Mag| Sponsored Sponsored
Undo
Powered by Taboola Powered by Taboola
Paul Johnson, director of the independent research body the Institute for Fiscal Studies (IFS), noted that public finances have not meaningfully improved, the growth outlook has weakened and inflation is staying higher for longer.
That means tax revenue for the Exchequer will continue to rise as ongoing freezes to income tax thresholds mean more people with growing earnings are pushed into paying tax.
Mr Hunt could have used the proceeds to ease the ongoing “fiscal drag” or compensate public services for higher costs, Mr Johnson said, but opted for the tax reductions instead.
“These tax cuts won’t be enough to prevent this from being the biggest tax-raising parliament in modern times,” he said.
Promoted stories
热门话题
在万宁引起很大反响！用「小黑丸」就能简单让40多岁女性体型有惊人的变化！热门话题 了解更多
Undo
by Taboola by Taboola
Sponsored Links Sponsored Links
Promoted Links Promoted Links
The Resolution Foundation said the ￡10 billion of personal tax cuts are far lower than the ￡45 billion of already announced national insurance and income tax rises.
The think tank said households will on average be ￡1,200 worse off overall because of the changes announced in this parliament.
Chief executive Torsten Bell said: “The truth is, taxes are up not down. Today’s cuts are dwarfed by tax rises already underway. By the end of this decade, taxes are set to be up by the equivalent of ￡4,300 per household compared to 2019.”
Both organisations pointed out that Government departments – which have seen real spending eroded by higher inflation – are set to face a major spending squeeze under Mr Hunt’s plans.
Mr Bell said: “Worse, the giveaways announced today are funded by handing whoever wins the next election implausibly large spending cuts. Tax cuts to boost business investment are welcome, but undermined by plans to cut public investment by over a third – it’s hard to think of a more anti-growth policy.”
Mr Johnson said: “These tax cuts have been ‘paid for’, in effect, by a bigger squeeze on the real-terms value of public service budgets and an even bigger squeeze on public investment, which is frozen in cash terms. There’s a material risk that those plans prove undeliverable and today’s tax cuts will not prove to be sustainable.”
Ian Mulheirn, an economist at the Resolution Foundation, was even blunter in his assessment.
He wrote on social media site X: “OBR draws out completely implausible implications – real terms cuts of 2.3-4.1%/yr after 2025 for unprotected departments.
“What’s the plan here? Abolish the criminal justice system and public transport maybe?
“This should be the debate, not ‘have they really cut taxes?'”
Meanwhile, the Institute for Public Policy Research (IPPR) said the cuts to national insurance contributions largely benefit the best-off households.
The IPPR also said London and the South East of England will see the biggest gain from the reductions with an average annual gain per working-age person of ￡316 and ￡290, while those in the North East, Yorkshire and the Humber, and Wales see the smallest benefit, with average gains of ￡192, ￡214, and ￡211, respectively.
Henry Parkes, principal economist and head of quantitative research at IPPR, said: “There are many reasons why now is not the time for tax cuts; but even less so when the principal beneficiaries of today’s changes will be the best off households, rather than those worst hit by the continuing cost-of-living crisis. They also disproportionately benefit the richest areas of the country most – the opposite of levelling up.
“More broadly these tax cuts are accompanied by plans to make deep cuts in public services and investment in the future – an approach that commands very little support from the public and will make it harder, not easier, for the UK economy to grow as it needs to.”
More about PA Ready Paul Johnson Chancellor Institute for Fiscal Studies Jeremy Hunt Commons Resolution Foundation North East Yorkshire Humber Wales London
1/ 1Hunt’s tax cuts based on ‘implausible’ public spending squeeze – think tanks
Hunt’s tax cuts based on ‘implausible’ public spending squeeze – think tanks Chancellor of the Exchequer Jeremy Hunt announced a number of tax cuts in his autumn statement (Aaron Chown/PA)
PA Wire
Promoted stories
investing.com
Greta Thunberg's Car Shocks The World, Proof In Picturesinvesting.com| Sponsored Sponsored
Undo
DailyChoices
Nearly 60, Pitt Confesses "She Was Always the One"DailyChoices| Sponsored Sponsored
Read More
Undo
StreetInsider.com
Nobody Knew This Existed Until A Drone Took This PictureStreetInsider.com| Sponsored Sponsored
Undo
？ Subscribe to Independent Premium to bookmark this article
Want to bookmark your favourite articles and stories to read or reference later? Start your Independent Premium subscription today.
Subscribe
Already subscribed? Log in