- By Paul Seddon & Becky Morton
- Political reporters
Jeremy Hunt has announced cuts to tax paid by workers from April, in a bid to revive Tory fortunes.
The chancellor cut National Insurance by 2p in the last spring Budget before the next general election.
Labour said the move was a “con” and would leave many people worse off.
The Budget also included increases to child benefit salary thresholds and a new vaping levy, while non-dom tax status was abolished.
The 2p cut on National Insurance is the second by the chancellor this year. Mr Hunt argued that it would make the tax system fairer and help revive the economy.
But Labour leader Sir Keir Starmer, while supporting the cut, said it would not offset freezes to tax thresholds, which will see some people pay more income tax over time.
He added that taxes were at a 70-year high, and people had taken an “unprecedented hit” to their living standards in recent years.
Mr Hunt had been under pressure to cut personal taxes, with the Tories trailing Labour heavily in opinion polls ahead of the next general election, expected to take place later this year.
January’s cut to National Insurance, announced at last year’s Autumn Statement, did not result in the bounce in the polls longed for by Tory MPs.
It had fuelled speculation ahead of the Budget the chancellor would opt to cut income tax, which is thought to have a greater political impact with voters.
But despite this, he announced a widely-trailed 2p cut in National Insurance (NI), reducing the rate paid by employees from 10% to 8%, and from 8% to 6% for the self-employed.
He also extended eligibility for child benefits for around 170,000 families, with people earning up to £60,000 getting benefits in full and the threshold for them to be withdrawn entirely raised to £80,000.
Mr Hunt said the change to NI would be worth £450 a year to an employee on an average salary of £35,000.
In an interview with BBC political editor Chris Mason, he added his long-term ambition was to abolish National Insurance completely, but this would only take place when this was “affordable”.
The party had earmarked extra revenue from the policies to pay for new breakfast clubs and extra hospital appointments.
Labour has been keen to stress that freezes in the thresholds when people start paying income tax, slated until 2028, mean the tax burden will still rise for many, pointing as well to “stealth” rises in council tax.
In the Commons, Sir Keir said the chancellor was attempting to “give with one hand, take even more with the other”.
He added: “The whole country can see exactly what is happening here. They recognise a Tory con when they see it.”
Liberal Democrat leader Sir Ed Davey called the Budget a “last-ditch attempt from the Conservative Party to cling on to power”, adding it “reeks of desperation”.
“Never before have I seen a government deliver weaker public services, higher taxes and zero growth all at the same time,” he added.
Former ministers Suella Braverman and Sir David Davis both expressed regret that the chancellor had not opted to cut income tax.
Mrs Braverman, who was sacked by the prime minister last year, also said frozen income tax thresholds had led to “millions of low and middle-income workers being dragged into paying higher tax” while “unprecedented levels of low-wage, low-skilled migration” were damaging the economy.
“The government could have fixed both problems today but did not,” she said.
Tax threshold changes
The Institute for Fiscal Studies, a think tank, says the combined effect of both cuts in NI and the threshold freezes between 2021 and this April means those earning between £26,000 to £60,000 are better off.
However, people earning less than £25,000 are worse off, whilst those earning £60,000 to £120,000 will see little difference.
As well as making…
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