Economic growth is stalling but the Chancellor still wants to go ahead with a range of tax giveaways that will largely benefit those on middle and high incomes as well as those with substantial wealth.
These tax cuts include:
- changes to the personal allowance threshold at which people start paying income tax;
- changes to the threshold at which people start paying 40 per cent income tax;
- changes to the inheritance tax threshold (a tax currently paid by less than 3 per cent of estates).
At the same time as continuing with these tax cuts which will benefit the better-off, the Chancellor also plans to continue with cuts to disability benefits and universal credit – negatively impacting on disabled people and working lone parents – with the latter group seeing their benefits reduced by 73p for every extra pound they earn, an incredibly high effective marginal tax rate.
Rather than continue with these benefit cuts, the Chancellor should improve support for disabled people and working lone parents. He could help pay for this by maintaining the current thresholds for inheritance tax and 40 per cent income tax. And he should also think again about reducing tax relief on private pensions for higher earners. This was an idea he recently flirted with but then lost his nerve over for fear of losing support at a crucial time with the Brexit poll on the horizon.