Downloading PDF. Please wait... Issue 2895

Hunt’s budget is based on taking the axe to services

The budget was guaranteed to see desperate attempts to give the impression of standing up for workers while serving the rich
Issue 2895
Tory Chancellor Jeremy Hunt Budget Day 2023 (Picture: Rory Arnold)

Tory Chancellor Jeremy Hunt Budget Day 2023 (Picture: Rory Arnold)

The Tories will scam millions with their latest budget. In an act of daylight robbery, the Tories are pushing headline-grabbing tax cuts while cutting public spending and implementing stealth tax rises elsewhere.

The tax cuts remain a cynical ploy in the run up to the general election—a last ditch attempt to win over voters.

Unsurprisingly, Jeremy Hunt—Tory chancellor— says the route to fund cuts to national insurance or income tax is by slashing the budget of already crumbling public services.

He could be raising tax for the rich instead. The rate of corporation tax, a tax on profits, is currently 25 percent. That’s 3 percent lower than when the Tories came to office in 2010. And the tax rate for top earners in Britain is 45 percent, 5 percent lower than in 2010.

Instead, £25 billion of public spending cuts is what Hunt’s strategy means to fund the planned tax cuts, according to the Institute of Fiscal Studies (IFS).

Budgets for the NHS, schools, the military and overseas aid are all ringfenced, meaning cuts will come elsewhere.

Local government, transport and higher education, courts and prisons could all see cuts. Councils are already on their knees and will struggle to survive more rounds of austerity.

Andrew Goodwin, an economist at Oxford Economics, told the Independent, “The problem is that this comes on the back of large real-term cuts for those departments from 2010 and 2015 and quite restrained spending since.

“Efficiency savings have long been exhausted—you’re now really talking about choosing which services not to provide anymore.”

Britain spends £50 billion a year on its imperialist military but that’s been protected.

And Sunak recently promised to increase military spending from 2 percent to 2.5 percent of Britain’s total production—an additional £11 billion a year.

The magic money tree always exists for British imperialism, but never for public services. And it’s a false narrative that this is a tax-cutting government.

The Tories have frozen income tax bands, the threshold of different tax rates, as well as personal tax allowance—the point at which you start paying tax. The thresholds were frozen in 2021 and will be until 2028.

The freeze functions as a stealth tax rise as thresholds no longer increase with the rate of inflation, causing workers to be pushed into higher rates of tax sooner.

And the frozen personal tax allowance means a higher proportion of wages are subject to income tax.

Even the Office for Budget Responsibility—the government’s forecaster— calculates that by 2028 frozen tax bands will bring 2.1 million ordinary people into higher rates of tax.

And the freezing of personal tax allowance will bring 3.2 million new tax payers.

The allowance freeze disproportionately impacts the poorest workers.

Because their wages are lower, it means a larger proportion of their wages are hit by a stealth tax.

The frozen tax thresholds amid long-run tax cuts for bosses and the rich are a blatant act of class warfare.

It’s not the bosses and the rich that feel the bite of the stealth taxes. It’s the very worst off in society.

Since 2010, the Tories have used the excuse of reducing government debt to shrink public spending, open the door to privatisations and transfer money from the poor to the rich.

But Labour is committed to the same austerity politics as the Tories. Both promise to reduce government debt in five years time.

In January, Keir Starmer said, “If the money is for borrowing but the fiscal (spending) rules don’t allow it, then we will borrow less.”

Labour believes this capitalist orthodoxy, and is also terrified of Tory attacks painting Labour as a party of high taxation.

Spending and debt plans aren’t laws of nature, but political choices by the ruling class.

The Tory budget offers nothing but more pain to millions of people.

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