The crisis of the cost of living: at what time Rishi Sunaq’s announcement of taxation

Rishi Sunak is ready to announce billions of pounds of aid to people struggling with massive growth the cost of essential goods.

The chancellor is expected to release his support plan at 11.30 on Thursday after being subjected to strong pressure from all sides of the political spectrum.

He resisted calls to spend more money, claiming it was it would be “stupid”. do so now, when electricity bills will not rise until October.

But Sunak was forced to act the crisis deepened and the multimillionaire chancellor is increasingly seen as “untouchable” with the challenges faced by ordinary voters.

When will the aid be announced?

Reports indicate that an announcement is imminent and may appear on Thursday. The chancellor was in favor of waiting until the end of the summer, but events forced him to take more urgent measures.

Symptoms for the economy are deteriorating: consumer confidence has reached an all-time low, and businesses are cutting back on investment, warning that orders are drying up.

Announcing aid can now provide confidence for people who fear for their financial situation, thereby helping the economy as a whole.

What can be announced? – income tax

Oil producers in the North Sea may be among those affected by the unexpected tax

(PA Archive)

Labor is pushing the government to introduce a one-time tax on oil and gas producers in the North Sea, who are among those who have benefited from big price increases this year.

The Labor Party estimates that the tax could raise £ 1.2 billion to the treasury, which could be used to help people struggling with rising living costs.

This figure is only a small part of the additional costs that the British will suffer this year.

The Chancellor reacted coldly to the idea, but, according to The Timesit is now seeking to introduce a much broader tax on energy generators, including wind farm operators who have benefited from high prices.

It is reported that the tax will be targeted at 10 billion pounds “excess income”, but it is unclear how much it will attract to the Treasury.

Overall, the government is expected to consider a spending package of up to £ 10 billion.

According to the Resolution Foundation think tank, the government needs to spend £ 15 billion to help low-income people in the crisis.

Grants for electricity bills

Sunak could use the income tax revenue to raise the £ 200 cut to electricity bills announced earlier this year.

The cuts have been criticized because the money saved will be returned by collecting 40 pounds a year from bills over the next five years.

It is also not targeted at low-income people who have suffered the most from rising cost of living.

The Chancellor can turn this cut into a grant that will not be returned. Or it can increase the discount people get.

Increase the discount on a warm home

It is reported that the Treasury is seeking to make the existing scheme of discounts on warm homes more generous.

It offers three million low-income families a reduction of their bills by £ 150, but that could increase to £ 500 or £ 600.

It would be expensive for the government, but would have the advantage of being much more focused.

Increasing universal credit

Increasing benefits would be the easiest way to get the money people need.

There is a broad consensus among a number of think tanks, politicians and anti-poverty activists that this is the most effective way to target public spending.

However, the Chancellor does not want to agree. This week, he reiterated that he prefers lower taxes than higher benefits.

This will be seen as a reversal after the government refused to raise £ 20 to a universal loan introduced during the pandemic.

The chancellor will also face questions about why he argues that the outdated public IT system means that aid payments cannot increase more than once a year.

Reduction of VAT

It is believed that Boris Johnson is in favor of measures that will also help people with average wages, such as lower VAT.

The Liberal Democrats are in favor of lowering VAT on electricity bills from 5 percent to zero.

The move will cost around £ 2.5 billion and save the average energy consumer £ 90 a year. However, it will not be aimed at those who need it most.

Other tax cuts

The chancellor may refuse to increase the 1.25 percentage point contributions to national insurance, but he has already partially returned to raising taxes.

In his spring statement, he announced policy changes that were designed to help people with below-average incomes. Thus, any further changes will benefit people who are already relatively well off.

It is said that the government is considering the planned reduction of income tax by 1 item, which should be introduced in 2024. Again, this will be a poorly targeted measure.

The crisis of the cost of living: at what time Rishi Sunaq’s announcement of taxation

Source link The crisis of the cost of living: at what time Rishi Sunaq’s announcement of taxation

Back to top button