The average family is facing a £5,550 tax hike over the next decade as a result of Conservative tax rises, new research commissioned by the Liberal Democrats has revealed.
The Liberal Democrats are calling on Boris Johnson to scrap the tax hikes and bring in an emergency tax cut in the Queen’s Speech, to help families struggling with the cost of living crisis.
The research by the House of Commons Library finds that even after Rishi Sunak’s promised cut to income tax in 2024, families will still be left poorer by around £600 a year.
The analysis is based on a typical household with two earners on a median salary of £33,790. It looks at the total impact of the tax changes announced by the Conservatives since 2021, including the freezing of income tax thresholds and the National Insurance rise.
The research finds that this average household would face a £3,250 tax hike from the freezing of income tax thresholds, and another £2,300 from the National Insurance rise. The additional taxes paid per year would peak at £630 in 2024, then fall to £480 in 2025 when Rishi Sunak’s promised tax cut comes in. The additional tax burden will then increase again to £610 a year by 2030 as the freeze to income tax thresholds continues to bite.
The Liberal Democrats are demanding an emergency tax cut through slashing VAT from 20% to 17.5% for one year – a move that would save families an average of £600 this year. It has prepared legislation to implement this tax cut, which it says the Chancellor could bring into force “at the stroke of a pen.”
Liberal Democrat Leader Ed Davey said: “Even after Rishi Sunak’s promised tax cut, the average family faces a staggering £5,500 tax hike over the next decade. It shows there is no light at the end of the tunnel under this Conservative government, just years of painful tax rises.
“This country is faced with a law-breaking Prime Minister and a tax-hiking Chancellor. We desperately need a change of leadership at the top and the local elections this week are a chance to say so.
“Now is not the time to be hiking people’s taxes, just as energy bills and inflation go through the roof. People are facing a cost-of-living crisis, and they need an emergency tax cut now.”