Rishi Sunak has been accused of introducing an £11 billion “stealth tax”, after it emerged that more than one million people will be forced to stump up the higher rate of income tax by 2026.
The Treasury has frozen income tax thresholds, meaning that 1.2 million more people will find themselves in the 40p tax band because of inflation, House of Commons library research has found.
The higher rate of income tax starts at £50,070. An additional 1.5 million low earners will be captured by the basic 20p rate, which begins at £12,750.
Analysis – commissioned by the Liberal Democrats – found the total cost of the tax raid in England, Northern Ireland and Wales will be £11 billion, according to The Times.
Christine Jardine, the Treasury spokeswoman for the Liberal Democrats, told The Daily Telegraph it was an “unfair stealth tax that will clobber families who are already feeling the pinch”.
The plans have also drawn criticism from the Conservative backbenches, with Jake Berry – a former northern powerhouse minister – urging Sunak to “think again”.
Experts warned the tax increases would pile more pressure on families already facing a cost of living crunch due to price increases and higher energy bills. Torsten Bell of the Resolution Foundation think tank has warned of a “living standards catastrophe”.
Bell said last month that families would face a £1,200 hit by April “from soaring energy bills and tax rises”.
Chief executive Torsten Bell said: “So large is this overnight cost-of-living catastrophe that it’s hard to see how the Government avoids stepping in.”
The chancellor has vowed not to abandon the government’s planned £12 billion national insurance rise, despite criticisms from the Cabinet.
A significant number of Tory MPs oppose the hike being imposed in April, as does Labour, and Lord Frost resigned from the Cabinet citing high taxation as one of his major concerns.
Sunak said it was irresponsible to “duck difficult decisions’, insisting the rise should go ahead.
Speaking during a visit to a vaccination centre in Haywards Heath, West Sussex, he told broadcasters: “I have enormous respect for all my colleagues and if you take a step back and look back at why we’re in this situation, it’s because we’re facing an unprecedented level of backlogs in the NHS and we as a Government don’t think it’s acceptable, we don’t want families to be waiting years and years to get the treatment they need.
“It’s always easy to duck difficult decisions but I don’t think that’s the responsible thing to do.”
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