Tories will hike taxes by up to £3,500-a-year for every UK home by next election

29 September 2023 , 09:37

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Families are being 'clobbered' by tax rises, Labour say (Image: Getty Images)

British households face paying £3,500 a year more in taxes by the next election under hikes imposed by the Tories, a respected thinktank has said.

Analysis by the Institute for Fiscal Studies (IFS) found the Government has presided over the biggest set of tax rises in a single parliament since the Second World War, accounting for around 37% of national income by the next election. This means the Government will raise £100billion more in tax revenues next year compared to 2019, when taxes were at 33% of national income.

The spike is equivalent to around £3,500 more per household, although it will not be shared equally, the IFS said. No parliament has seen a bigger increase in taxes since comparable records began in the 1950s.

The findings, which come on the eve of the annual Conservative Party Conference, are likely to rile Tory backbenchers who want Rishi Sunak to slash taxes. 49-day Prime Minister Liz Truss, whose tax-cutting mini-Budget sparked economic chaos, is expected to assembler her allies for a rally on "growth" in a headache for the Prime Minister.

Ms Truss tweeted today: "This unprecedentedly high tax burden is one of the reasons our economy is stagnating and why we need to cut taxes to help make Britain grow again. We should always seek to reduce the tax burden, especially when there’s so much pressure on family budgets."

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Treasury Minister Andrew Griffith refused to rule out further tax rises today but insisted that tackling inflation was the Government's priority. He said: "I can point to what the proud track record of Conservative governments are, the fact that philosophically we believe that you need a strong economy, you need to build that on stable foundations which is why bearing down on inflation is so important, that's been the priority the Prime Minister has set." Mr Griffith said tax rises had been a consequence of significant spending required during the pandemic.

But Ben Zaranko, a senior research economist at the IFS, said the pandemic could not be blamed for rising tax levels and predicted that a high-tax approach was here to stay regardless of who wins the next election. "It is inconceivable that this Parliament will turn out to be anything other than a tax-raising one - and it looks nailed on to be the biggest tax-raising parliament since at least the Second World War," he said.

"This is not, for the most part, a direct consequence of the pandemic. Rather, it reflects decisions to increase Government spending, in part driven by demographic change, pressures on the health service, and some unwinding of austerity. It is likely that this Parliament will mark a decisive and permanent shift to a higher-tax economy."

Labour said that the Tories had "clobbered" the public after trashing the economy. Shadow chief secretary to the Treasury Darren Jones said: "Successive Tory government have overseen 13 years of low growth and stagnant wages. Their response in the face of this bankrupt legacy is always to load their failure onto working people. And what are we getting back? Crumbling public services. Brits are working hard but getting clobbered with 25 Tory tax rises and a continuing Conservative premium on their household budgets."

Liberal Democrat Treasury spokesperson Sarah Olney said: "This Conservative Government crashed the economy and is making the public pay the price. This is the same party which promised not to raise people's taxes and is now taxing families through the nose. Despite this, ministers have given tax cuts to the big banks, failed to close loopholes in the windfall tax on oil and gas giants and wasted eye watering sums on dodgy PPE contracts."

A Treasury spokesperson said: "Despite needing to take the difficult decisions to restore public finances in the face of the dual shocks of the pandemic and Putin's illegal invasion of Ukraine, the latest data shows our tax burden will remain lower than any major European economy. Driving down inflation is the most effective tax cut we can deliver right now, which is why we are sticking to our plan to halve it, rather than making it worse by borrowing money to fund tax cuts. We have also taken 3 million people out of paying tax altogether since 2010 through raising personal thresholds, and the Chancellor has said he wants to lower the tax burden further - but has been clear that sound money must come first."

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Lizzy Buchan