UK Faces Growing Criticism Over "Stealth Tax" Strategy
Alert issued on potential covert £9bn income tax robbery
The British government is facing mounting criticism over its controversial "stealth tax" policy, with analysts predicting that approximately 1.9 million workers will be pushed into higher tax brackets by 2030. This extra taxation is estimated to generate £8.9 billion for the government's coffers.
The stealth tax strategy is achieved by freezing personal allowances and higher rate tax bands, a move initiated by the government last July, and extended from an earlier policy under Rishi Sunak. This approach results in a real-terms tax hike, with a worker earning minimum wage expected to pay an additional £750 in income tax by the end of the 2022-23 tax year—representing a nearly 40% increase. A professional in London, earning 50% above the median wage, is forecasted to pay an additional £2,700 in income tax, equivalent to a 23% increase.
The brunt of the tax increases will reportedly be felt most acutely in London and the south east, with residents paying an estimated £3 billion in additional taxes between the current and 2029-30 tax year. This real-terms tax rise comes despite Labour's election promise not to increase taxes for working people.
Daisy Cooper MP, Liberal Democrat Treasury spokesperson, commented, "During this cost-of-living crisis, our hardworking citizens will again bear the brunt of this stealth tax bombshell. People should be rewarded for their efforts, not have earnings stripped away through punitive measures."
The extra tax revenue comes at a time when chancellor Rachel Reeves is under growing pressure to breach her own fiscal rules, potentially necessitating compensatory tax rises to balance the books in the Autumn budget. Labour has already pledged to roll back cuts to pensioner winter fuel allowances, and intends to scrap the two-child benefit cap, a move anticipated to cost £3.5 billion. The combined measures could exhaust the chancellor's £9.9 billion fiscal headroom, escalating expectations of further tax increases.
Business uncertainty surrounding potential future tax rises has reportedly had a more significant impact on British business confidence than U.S. president Donald Trump's inconsistent tariff policy, according to a report by the National Institute of Economic and Social Research.
The institute criticises the arbitrary nature of fiscal rules for contributing to this uncertainty, stating, "Endless speculation about the size of the government's fiscal headroom is entirely self-inflicted. It is the result of arbitrary fiscal rules that have served the country poorly."
As the government grapples with financial constraints and fiscal challenges, the impact of the stealth tax strategy on both citizens and government revenue continues to fuel ongoing debate and criticism.
- The controversy surrounding the UK's "stealth tax" strategy has sparked debate in the realm of finance and general-news, with critics arguing it unfairly burdens citizens.
- In the context of politics, analysts predict that the "stealth tax" policy willgenerate additional revenue of £8.9 billion for the government, with over 1.9 million workers potentially moving into higher tax brackets by 2030.
- The effects of the "stealth tax" strategy are expected to be most pronounced in London and the south east, with residents estimated to pay an extra £3 billion in taxes between the current and 2029-30 tax year, straining already tight household budgets.
