The Truss administration’s obsessive and damaging focus on reducing taxes, particularly for the wealthy and corporations, at any cost has led to her policies being eviscerated by all sorts of organisations and individuals, including many people from her own party.
The irony, according to an analysis by the Institute for Fiscal Studies, is that the average household will actually end up paying more tax overall, due to the Conservative’s stated policy of freezing the thresholds at which we start to pay income tax for four years, alongside many other tax and benefit related thresholds.
Of course due to inflation - and we have a lot of that at the moment - keeping the threshold at which tax is due to the same nominal amount means that more people reach that threshold without them having achieved any additional real spending power. But “quietly freeze things as they are” is a much less attention grabbing policy than “make wild cuts to specific things” so the effects might not be as well-known as other parts of their catastrophic mini-budget.
The IFS analysis suggests that by 2025-2, 1.4 million more people will be paying income tax, costing basic-rate tax payers an extra £500 per year.
1.6 million more people will be paying higher-rate tax, which will cost them about £3,000 extra per year.
An extra 125k people will be affected by the benefit cap, and 500k more families will lose some or all of their child benefit.
…on average for every £1 households gain from high-profile cuts to rates of income tax and National Insurance, they lose £2 from the freezes and policy roll-outs.
Whilst literally every income decile will see negative effects to their income, it nets out in a regressive way with the poorest section of society seeing a 2.8% reduction of income, vs 1.1% for the richest.