Households to pay £3,000 more in tax since Johnson became PM, says think tank
The Resolution Foundation also found the poorest fifth in the country are likely to be around £280 a year worse off.
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Your support makes all the difference.Tax bills for households will be £3,000 higher since Boris Johnson became Prime Minister as a result of changes announced in the Budget according to a leading think tank.
The Resolution Foundation (RF) also said the poorest fifth in the country will be around £280 a year worse off as a result of the £20 cut to Universal Credit.
Researchers said three-quarters of households on UC will be worse off as a result of the changes, even with new tapering rules and a rise announced by Chancellor Rishi Sunak.
Wages are also unlikely to rise in real terms this year due to high inflation and will only increase by around 2.4% between the financial crisis in 2008 and 2024, compared with a one-third rise recorded in the 16 years prior to 2008.
The calculation of taxes increasing by £3,000 by 2026/27 means the tax take will be at the highest level since 1950, RF found.
James Smith, research director at the RF, said: “We’re becoming a bigger state and more higher tax state.
“The total increases in taxes since Boris Johnson has become Prime Minister is equivalent to around £3,000 for each household in the UK, so this is a really chunky change, although most of that falls on people on higher and middle incomes.
“We’re not set for the low-tax economy that the Chancellor wants or the high wage economy that you see on the horizon.
“Slow growth is really casting a shadow over what’s happening in terms of the overall health and outlook and household finances are still in pretty bad shape and a huge challenge.”
Shadow chancellor Rachel Reeves described the analysis as “staggering”.
“This is a Budget hammering working people while giving banks a tax cut,” she said.
Speaking at a Resolution Foundation post-Budget briefing on Thursday, Office for Budget Responsibility (OBR) chairman Richard Hughes separately warned that the Chancellor’s ambitions to cut debt could “easily be wiped” out by lower growth, rising interest rates or further inflation.
Mr Hughes said the Treasury chief had been able to put about £20-25 billion of revenue raised from increased taxes and better-than-expected forecasted growth into getting “debt falling” but argued that Mr Sunak’s plans had incorporated only a small margin of error.
“I would describe (debt) as broadly plateauing,” he said.
“It is falling by 0.6% of GDP in the target year, from a level of around above 80% of GDP – that is one-sixth of our three-year ahead forecast error for the debt to GDP level.
“It could easily be wiped out by 1% lower growth in that year, or a 1% increase in interest rates or higher inflation.
“So it is the narrowest of margins against which to achieve the Chancellor’s fiscal objectives, but nonetheless he gets it on a slightly declined trajectory over the medium term.”