With the general election just around the corner, the main political parties have released their manifestos, each one having a thing or two to say about tax.
Though the undeniable, and frankly exhausted, topic of Brexit remains in the forefront of 2019’s latest leadership contest, the tax policies have taken centre stage with the media honing in on the parameters of each Party’s promises.
So what is the overview at the moment? Who’s promising what? Here’s a quick (and admittedly brief) overview of what Johnson, Corbyn, and Swinson are promising, with just over two weeks until election day.
The pledge made in Sunday's manifesto announcement not to raise the rate of income tax, VAT or NI, has been the main takeaway of the Tory campaign to the tax world.
Not to be overlooked is Boris Johnson’s U turn on his pledge to cut tax cuts for higher earners. The policy, outlined by Johnson during the Tory leadership race, had promised tax cuts for Britain’s highest earners. It’s now been set aside in favour of a rise in the National Insurance threshold.
The proposed threshold increase will see a jump from the current £8,632 to £9,500, leaving individuals just under £100 better off. This has noticeably negated to outline the previously discussed policy to bring the threshold to a target of £12,500, calling into question whether this is still on the cards for the Party.
There’s been a further flip on previous promises to cut business tax from 19% to 17%, though it did outline plans to cut 4 specific taxes: R&D tax, business rates, construction tax, and employers national insurance contributions. This is possibly in replacement of the broader cut across the board.
Definitely causing the biggest stir in the media this election is Labour’s tax plans. Jeremy Corbyn and Shadow Chancellor John Macdonald have been forced to speak out against condemnation from organisations such as the Institute for Fiscal Studies, who branded the plans as “just about the most punitive corporate tax regime in the world.”
Labour urge that 95% of people wouldn’t be paying anymore tax now that they’re already under the propositions, with the jump of £82.9bn of extra taxation a year aimed at higher earners and big businesses.
High earners will be targeted with a 45p tax rate for those earning over £80,000 and 50p rate for £125,000+ earners.
The Liberal Democrats have entered this election race in a similar spirit to Labour, brandishing harsher policies to attract disenfranchised voters. While Jo Swinson’s headline pledge has to be to put an end to Brexit, though only with the threat of another looming referendum, her Tax policies have also come to the forefront of her campaign.
A promise of a 1p increase to income tax, and a 3% increase in corporation tax are set to fund the parties £62.3bn spending pledges. This has been announced alongside promises of 1p in the pound of income tax being ring fenced for the NHS, grabbing headlines and demonstrating the commitment of the Party to national health. However, Swinson has yet to clarify the parameters of this pledge. Would a drop in income tax in the event of a recession lead to cuts to the NHS?
There’s also been a ‘frequent flyer’ tax outlined, achieved through a reform of Air Passenger Duty, targeting frequent international flights, in an aim to tackle climate change and arguably appeal to the younger vote.
With the uncertainty of Brexit still looming over businesses, it’ll be interesting to see which of the parties has the opportunity to implement their promises, and even more interesting to see which ones eventually make it through parliament.
To keep up with election developments, follow this link to the BBC’s full election coverage.
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