Sunak and Hunt 'planning the unthinkable' with 'stealth tax raid on ordinary workers'
9 November 2022, 12:00 | Updated: 9 November 2022, 13:17
Rishi Sunak and Jeremy Hunt are reportedly considering launching a 'stealth tax raid' on ordinary workers, among other tax rises and spending cuts, in a bid to fill the £60 billion budget black hole.
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The Prime Minister and the Chancellor are also considering letting local authorities raise council tax independently and increasing taxes on top earners, the Mail Online reported.
Ministers will seek to fill £35 billion of the gap in the public finances through "eye-watering" spending cuts, with the remaining £25 billion covered by tax rises.
Full details remain unclear and the government has not made final decisions yet ahead of the Autumn Statement next Thursday, when Mr Hunt will set out the ministers will take to balance the national books.
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But one option on the table is reportedly a series 'stealth tax' on ordinary people - in which the government would not raise tax thresholds in line with skyrocketing inflation.
That would mean higher payments for workers without ministers technically having to raise taxes.
Under this plan thresholds for income tax, national insurance, inheritance tax and pension allowances would all be frozen.
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A Treasury source said: "The number one thing that is causing pain for millions is inflation – the hidden tax eating into pay cheques, savings and the weekly food shop.
"When inflation is high, interest rates increase too, pushing up the cost of mortgages and business loans. We have to wage a war on inflation."
The government is also considering raising the top rate of income tax from 45p to 50p - where Labour left it in 2010 - breaking a Conservative manifesto pledge.
That would be a drastic shift from the government's position just six weeks ago, when then-chancellor Kwasi Kwarteng announced he was scrapping the top rate of income tax.
It is unclear if the government will make this change, as it would only raise about £750 million a year.
A Conservative MP said Mr Sunak could raise the top rate of tax to ward off criticism of his own wealth.
He said: "Rishi doesn't consider anything without asking 'how will this make me look?' A 50p tax rate will help him paint himself as no friend of the rich."
Meanwhile Mr Hunt is also considering allowing councils to raise their taxes independently, a move that many local authorities would welcome as they battle yawning chasms in their budgets.
But it would break another campaign promise for Mr Sunak, who said that councils would have to hold a referendum to raise their taxes over 2.99%.
It comes as ministers still refused to rule out scrapping the pensions triple lock - although a minister hinted yesterday that it could remain in place.
Work and Pensions secretary Mel Stride told the House of Commons: "Pensioners are absolutely at the forefront of the group that we want to really protect as much as we can through these difficult times."
"Hard choices have to be made, but within those hard choices there is a core mission and that is to look after the most vulnerable."
Former Tory leader Sir Iain Duncan Smith positioned himself firmly against the tax rises: "It would be completely ridiculous to raise taxes further now in order to fill a notional hole in the finances in a few years' time.
"All you would do is plunge us into a deeper recession and the deficit will increase even further. If we go down that route then our goose is cooked."
