Labour to vote against stealth Income Tax raid on families in Budget U-turn


Labour will vote against the Tories’ £8bn-a-year stealth raid on Income Tax this week, a Shadow Cabinet Minister revealed today.

Shadow Foreign Secretary Lisa Nandy said the party would try to block plans to freeze income tax thresholds until 2026.

The challenge is unlikely to succeed as Boris Johnson has a working Commons majority of more than 80 seats.

The move marks a swift U-turn days after Shadow Chancellor Anneliese Dodds indicated the party would support the freeze.

Ms Dodds said on Thursday that it would have been wrong for Rishi Sunak to impose the freeze “right now”, but it will only kick in from April 2022. She added: “In the future, we’re not going to oppose change to that personal allowance, the freezing of it that the Chancellor set out for the future.



Shadow Chancellor Anneliese Dodds said on Thursday: "In the future, we're not going to oppose change to that personal allowance, the freezing of it that the Chancellor set out for the future"
Shadow Chancellor Anneliese Dodds said on Thursday: “In the future, we’re not going to oppose change to that personal allowance, the freezing of it that the Chancellor set out for the future”

“Because actually what the Conservatives have done around this previously has benefited the best-off most. And they’ve not for example backed low income families with social security in the way they needed to.

“So we’re not going to oppose those future changes to the personal allowance, the freezing of the personal allowance in the future.”

Yet Ms Nandy told Sky News today: “We are going to vote against it this week. We think now is absolutely the wrong time to be targeting low and middle-income earning families for tax hikes and squeezing their incomes.

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“Not least because if you do that, it means they’re not going out and spending on the high street. The economy’s recovery is very fragile at the moment.”



Lisa Nandy told Sky News today: "We are going to vote against it this week"
Lisa Nandy told Sky News today: “We are going to vote against it this week”

The Shadow Foreign Secretary denied Labour was trying to be “opportunistic” or “have its cake and eat it” by trying to stop tax hikes while demanding extra public spending.

She said: “We’ve been absolutely consistent about this, that we don’t want to see low and middle earning families paying the price for the pandemic.”

Asked to clarify the freeze would affect higher earners more than lower earners, Ms Nandy said: “It does, but we’ve been consistent in saying the recovery is very fragile.”

She said families were facing a “perfect storm” of council tax rises in April and Universal Credit cuts in September, and “if you start to target those families too quickly, what you’ll see then is the recovery choked off before it’s even begun.”

Under the Budget plans, the Income Tax personal allowance – which rose dramatically under the Tories and Lib Dems – will rise slightly in April but then be frozen at £12,570 until 2025/26. So will the 40p tax rate threshold of £50,270.

The freeze will only cost low earners around £13 in lost tax breaks in its first year but will pile up as the cumulative impact mounts.

They go from raising £1.6bn for the Treasury in 2022-23, to £8.2bn in single year in 2025-26.

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The IFS think tank warned the UK could have more than 5million people in the 40p tax band by 2025 due to the freezes – up from 4.1million now and 3million in 2010.

Meanwhile financial expert Sir Steve Webb has warned hundreds of thousands of families could lose their child benefit by 2025 as a threshold for starting to pay it back in tax remains at £50,000.

It comes as Rishi Sunak is trying to drum up support for a new way to tax online retail giants like Amazon.

Days after delivering the Budget, the Chancellor is looking ahead to the G7 summit in Cornwall in June to meet his finance minister counterparts as he attempts to level the playing field for Britain’s struggling high streets.

“One of my priorities in the G7 this year, which I’ve already started work on, is to try to get international agreement on a new way to tax these companies,” Mr Sunak said.

“I spend a lot of time talking to my finance minister colleagues around the world about this.”

It’s understood a range of consultations and tax ideas will be published on March 23.





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