Tory Tax U-turn

Back in 2015, whilst austerity was swirling the nation and people were debating whether or not they should trust Ed Miliband due to the fact he looked like a googly-eyed weirdo, David Cameron decided to instruct voters that they should go with their ‘gut instinct’ and trust the Conservatives to cut taxes. This was all part of his 5 year ‘triple tax lock’ pledge which would not only see the Conservatives win a majority but also see no rises in VAT, national insurance or income tax for the next 5 years. This was seen as a cunning attack against Labour’s so-called pay raise promise that could potentially see people with a £1,000 pay rise only then to find out that actually, they would be much worse off with their tax bill looking at increasing by £10,000.

This tactful move alongside other policies such as not cutting tax credits, which didn’t last long, was one of the reasons as to why David Cameron was re-elected. However, not even 3 let alone 5 years down the line it seems as though the Conservatives want to scrap their ‘tax lock’ pledge and instead have decided to settle on just not raising VAT. This I’m sure is a relief to quite a few tory voters as for a while they weren’t too sure what they would be voting for in terms of tax pledges. This was down to all-round family man Philip Hammond announcing in his budget a rise in class 4 national insurance for self-employed workers. Which would have meant that the rate would rise from 9% to 10% in April 2018 and then to 11% in 2019.

Fortunately, for the self-employed they decided to do a U-turn on their Budget promise, probably realising that they couldn’t do something called cheat the electorate. It has also been made clear that the Prime Minister has signalled that she would ditch the ‘triple-lock’ formula which would see the state pension increase each year. This means that Theresa May is thinking of replacing the ‘triple-lock’ which sees an increase in the state pension every year, with a less lavish, double lock. The triple-lock was introduced in 2010 by the coalition government. It was a guarantee to increase the state pension every year by the higher inflation, average earnings or a minimum of 2.5%. The idea behind the triple-lock was to protect pensioners from meaningless increases in the state pension as well as to make sure that their income was not eroded by the gradual increase in the cost of living.

Phillip Hammond & John McDonnell

The only question is, can people trust these new tax promises? And if the answer is yes then how do we know that another U-turn isn’t going to happen? The answer is we don’t. How could we possibly know in such uncertain times? We have an economy which dips and dives every time the word Brexit is thrown around on top of having a Prime Minister with no mandate. Mrs May made this clear to voters on The Andrew Marr Show by refusing to rule out tax increases, however it seems as though Shadow Chancellor John McDonnell, in what appears to be an attempt to get Labour up in the polls, has made a pledge saying that Labour isn’t going to be raising income tax for those earning less than £80,000 a year as part of an election “personal tax guarantee” for 95% of taxpayers. Not only does this protect low and middle earners from rises in the tax burden until 2022 but also it conveniently protects future members of parliament who as we all know earn £74,000 a year after their 10% pay rise back in 2015. The party is also ruling out increases in the standard 20% rate of VAT, personal NI contributions and income tax rates for those earning less than £80,000. Oh yes and let’s not forget the top 5% of earners who would be paying more to fund public services. HMRC figures actually show that the top 5% of earners pay almost half of all income tax in the UK. The figure of the top 1% is 27% with the poorest half of the country only paying 10% of all tax.

Having countlessly said that Labour poses no form of opposition to the Conservatives, leader of the Liberal Democrats Tim Farron has tried his best to try and gain support from the electorate, one attempt to do so is by proposing to protect the “triple lock” on state pensions. This, however, does mean that slightly wealthier retired individuals would lose out on their annual winter fuel payment which could see those on incomes in the 40% tax bracket lose the allowance between £100-£300. The Lib Dems have said that an extra £772 a year would be paid in pensions by 2021. It’s very hard to tell whether or not if each party would be able to keep its promise especially when it comes down to the triple lock but all we do know is that if the triple lock was taken away then pensioners would be £872 worse off. The triple lock isn’t the Lib Dems only plan because they also want to inject £6 billion pounds into the NHS and social care by planning a 1p rise in income tax. This proposal is fairly similar to the one they made back in 1990 on putting a penny on income tax for education this again is a way in which they can connect with the public over the issue of health care.

Three different parties with three different pledges but can we really trust any of them?  Can we really trust the Lib Dems again after their failed attempt to cut tuition fees and instead see them raise up to £9,000, nearly three times the £3,200 limit? Can we really trust Labour? Are these pledges such as scrapping the 1% pay cap on NHS workers and not raising income tax just fictitious promises because they know they aren’t going to win. Can we really trust the Tories? After what was supposed to be 5 years of a triple tax lock are we seeing the most realistic party out of the three or are they planning on raising taxes now purely because they know they are going to get a landslide majority?