Brit families hit with £1,410 'inflation tax' in small print of Autumn Statement
Families are set to be hit with a £1,410 ‘inflation tax’ this year, buried in the small print of Tory Jeremy Hunt’s Autumn Statement.
It comes as Labour blasted 12 “stealth taxes” hidden in the economic plan - even as the Chancellor claimed to be cutting taxes.
New analysis of documents produced by the government’s spending watchdog shows the upgraded forecast for inflation between this month and March 2024 will add £1,400 to average annual family spending.
Darren Jones, Labour's Shadow Chief Secretary to the Treasury, said: "Inflation is not just a number; it means higher prices that are forcing millions of families to cut back and make difficult choices.
"The Government would have us believe that the spectre of inflation is now in our past, but this analysis reveals it will continue to have a significant impact on household finances into the new year.
Shop prices 'are yet to peak and will remain high' as inflation hits new heights
The Office for Budget Responsibility (OBR) said it expected inflation to be higher and more persistent than it had predicted alongside March’s Budget.
Families could see an increase of £27 a week to their outgoings (PA)Comparing this to official data on household weekly budgets, it means a family’s weekly outgoings would be £27 a week higher next year.
That amounts to families having to spend around £1,410 more over a year on food, clothes, energy, filling up the car and going out to the cinema or to eat.
Mr Jones added: “Labour is now the party of fiscal and economic responsibility. It is the Tories who have got us to this position, and it will take a Labour Government to get our economy firing on all cylinders again and provide working people with the economic stability they deserve."
Meanwhile Labour drew attention to 12 “stealth taxes” in the autumn statement which will add to the misery for working people.
The 'tax' will drive up the cost of clothes, food, energy and trips out (Getty Images)They include freezes on the thresholds for income tax, national insurance and inheritance tax - which would normally be increased with inflation to prevent middle-earners being hit by tax bombshells.
Vehicle excise duty is due to be increased in line with inflation from next April, according to treasury documents - with the rate for the typical car expected to go up from £180 to £190.
Council tax wasn’t mentioned at all in the Autumn Statement, but the OBR have said Council Tax bills will rise by almost £13 billion over the next five years.
Labour also highlighted freezes on the savings limit for ISA accounts and on gambling duty bands, as well as excluding many businesses from a further year of the freeze on business rates, which it’s estimated could cost firms a total of £1.6 billion.
Labour's Darren Jones said inflation would continue to have a "significant impact" on household finances in the new year (Getty Images)As well as the 12% above inflation increase on hand-rolling tobacco, all tobacco products will see an increase by 2% above inflation.
8 money changes coming in February including Universal Credit and passport fees
And Labour pointed to an expansion of the UK Emissions Trading Scheme, increased environmental levies - plus the decision to delay the ban on petrol cars delivering a £700 million windfall to the taxman on fuel duty.
Mr Jones added: “While the Chancellor sold his Autumn Statement as a generous reward, look at the small print and it’s a Trojan horse packed with stealth taxes.”
A Treasury spokesperson said: “We have just introduced a tax cut for 29 million working people worth £9 billion a year, meaning that personal taxes for the average person are lower than every other G7 country.
“People working as nurses, teachers, police officers could see gains of hundreds of pounds a year after the cuts to National Insurance and since 2010 we’ve increased personal tax thresholds to take 3 million people out of paying tax altogether. Alongside this we’ve introduced full expensing, the biggest business tax cut in modern British history worth over £50 billion over the next five years, and a business rates support package that will support businesses and the high street.”
Labour branded the Autumn Statement a "trojan horse filled with stealth taxes" (Tejas Sandhu/SOPA Images/REX/Shutterstock)On the inflation tax, they added: "Halving inflation has been our top priority, and while it’s welcome news we’ve achieved this goal we know many people are continuing to struggle, which is why we must stay the course to continue to get inflation all the way back down to 2%.
“We will continue to support families – we have protected households with £3,700 of support over the last three years, and our national insurance cut will help 29 million people - saving the average employee £450. We have also increased the National Living Wage by £1,800 – the largest ever increase.
"Average disposable income is around £800 higher than the OBR expected this Spring and the Autumn Statement set out a clear plan to reduce our borrowing and debt to keep inflation falling, helping get mortgage rates back down to affordable levels."
Read more similar news:
Comments:
comments powered by Disqus
