It’s never been a worse time to be a British Taxpayer
If you have been reading the papers recently, or spending your time scrolling through X, then no doubt you will have seen the very troubling news: that for the first time in history, the Treasury now spends more on welfare, than it receives from income tax. This creates two very real problems.
Firstly, it threatens the UK’s fiscal sustainability and leaves the door open for yet more demand of the taxpayer. I’m not naïve to the fact that the Government receives tax revenue from other sources, but when income tax receipts no longer offset the cost of the welfare state, it only ends with tax rises, now or later. People’s taxes go up immediately to plug current year deficits, or the Government borrows more money to bridge the gap, which in turn increases the national debt and leads to more tax rises in the future. Whichever way you look at it: the taxpayer loses.
Secondly, the economic incentive to work becomes less appealing. If you get up early and work long hours, to build a better life for your family, but every penny you pay in tax goes to a ballooning welfare bill: are we really surprised that taxpayers would rather stay at home?
Few will dispute that a well-functioning society should shield those who genuinely fall on tough times, or who are vulnerable, but our welfare system isn’t doing that. Instead, it’s ‘functioning’ as an over-zealous comfort blanket. In fact, according to the Telegraph around half of the 1.8 million people unemployed at the end of last year have been out of work for more than six months. Worst still there are nearly 1 million young people not in education, employment, or training. It is clear that the welfare state is not helping people back into work but is doing the opposite. Walk into any Job Centre these days and most of what you will find is information on how to apply for this benefit or that.
When you look at the economic policies the Chancellor has presided over its hardly surprising we have ended up in this position.
Her Employer’s National Insurance rise, and changes to Business Rates, make it more expensive for businesses to employ staff, resulting in more a recruitment freeze or lay-offs, people who are then forced to rely on the state. Those businesses are also paying more in taxes - a double-edged sword plunged right through the heart of the aspiration and opportunity.
Things get even worse you consider that according to the International Monetary Fund, Rachel Reeves is now raising taxes at the fastest pace in the developed world. They also say that the UK tax burden is set to rise from 37.6% of national income, when she became Chancellor, to 42.1% in 2031; the highest peacetime level on record, and would mean every household paying £4,500 more in tax. What happened to Labour’s manifesto promise ‘not increase taxes on working people’?
These tax rises are hardly surprising when Reeves sits in front of hundreds of MPs whom, even at the thought of cutting government spending, act as if they are committing people to the gallows. We all remember when the Government was forced to abandon its £4 billion of proposed cuts to disability benefits after their own backbenchers mounted a rebellion. If the Government can’t even get the most modest of spending reductions through the Commons; then life as a taxpayer isn’t going to get easier any time soon.
Until the Government understands ‘that you cannot tax your way to growth,’ and recognises the need to help people help themselves, instead of relying on the welfare state, then everyone will continue to see less money in their pockets each month.
It’s never been a worse time to be a British Taxpayer, and if things don’t change, it will regretfully only get worse.
Mr Peter Bedford is the Conservative MP for Mid Leicestershire.
