YOU will be £300 worse off – as Rachel Reeves’ £40billion tax bomb Budget batters future growth and sets inflation soaring.
Office for Budget Responsibility experts have found the Budget will cost the average person £300 a year.
Brits will be £300 worse off following the Budget[/caption]
The forecasters warned that Britain’s economy faces another five years of limp growth.
The “trick and treat” Halloween package included:
- A freeze to fuel duty for a 15th consecutive year in a win for The Sun’s Keep It Down campaign
- A penny off a pint by cutting draught beer duty, but raising booze taxes on other drinks
- A gloomy forecast of sluggish growth in a blow to Labour’s flagship mission
- A stamp duty rise for second-home buyers of two percentage points
- A pay rise for millions as the minimum wage was increased by £1,400 a year
- A hike to a packet of cigarettes as smoking duties were raised
- A new tax on vapes ahead of the looming ban on disposable e-cigs
- Higher taxes on air passenger duty for private jets that hits the wealthy
- A benefits crackdown with Ms Reeves telling jobless Brits to “get back to work”
- An increase to the state pension of £473 next year through the triple lock
- An inheritance tax raid through freezing the rates people pay
- An increase to the Carer’s Allowance to give cash to 60,000 more carers
Rachel Reeves’s budget is set to push up growth for the next two years before it slides into reverse until 2030.
And the OBR said the Budget will ramp up inflation and interest rates – landing homeowners with higher mortgage costs.
Institute for Fiscal Studies expert Paul Johnson said: “The OBR pointed to a short-term sugar rush, as a result of the debt-financed spending splurge.
“But that turns into a modestly negative impact by the end of the parliament.
“In the longer term, extra investment, planning reform and greater stability should all help to boost growth, and the OBR said as much.
“They think the Budget will eventually boost output in a sustainable way, but only from 2032.”
The OBR has slashed its Real Household Disposable Income forecast for 2030 from £22,800 to £22,500 following the Budget.
In plain English, that means Labour’s Budget will leave the average person £300 worse off than they would have otherwise been.
The OBR said while the economy will grow faster in the short-term, by 1.1 per cent this year and two per cent in 2025, it will rise by less than two for the four years up to 2029.
RYAN SABEY Budget tax ‘boosts’ are Small Beer compared to £40BILLION of tax misery YOU need to plug
Ryan Sabey, Deputy Political Editor
RACHEL Reeves has used her first Budget to embark on a massive £40 billion tax raid – with only small relief for hard-working Brits.
The Chancellor told the country that there would be short-term pain before any gain at the start of a ten-year plan for Britain.
Treasury sources have been saying there would be no rabbits out of the hat – but there was one for workers.
But there will be a wait. Income tax thresholds will go up with inflation from 2029 leaving more money in the pockets of people going out to work.
There will be major relief to motorists too who will see fuel duty frozen for yet another year – thanks to The Sun’s Keep It Down campaign.
Yes, change won’t happen overnight if anyone was expecting to actually feel better off soon.
And with growth forecast to be less than 2 per cent for the next few years there could be more tax raids and savings on the way.
This Labour government had put growth at the very heart of its plans for office.
But the biggest hit will come to business. Some £25 billion a year by the end of the decade will come from a rise to employer national insurance contributions.
But to help small business there will be exemptions for those firms who employ four or fewer workers.
Ultimately, experts say the tax rise will be felt by ALL of us in the form of lower wage rises, as employers look to balance the books.
Despite some concern in the hospitality industry, there will be in part relief as she confirmed “a penny off a pint in the pub”.
Some will say that is small beer.
The move by the Chancellor to add £70billion to public spending over the next five years also takes the UK’s tax burden to the highest level since records began, the OBR added.
The dour prospects for the future growth made money markets question the rationale for the biggest increases in spending, tax and borrowing of any Budget in history.
In a further blow to the Government’s “pro business” claims, Ms Reeves’ £25billion hit to firms from pushing up employers’ NI contributions will ultimately hit the pay packets of millions of workers.
The OBR told journalists: “The majority of workers will feel their real wages are lower.”
That would result in higher prices — leading the Bank of England to keep interest rates higher for longer as inflation rises.
THE PEOPLE’S VERDICT
BUSINESS owners, families and working Brits have given their verdict on Rachel Reeves’ £40billion tax bomb budget.
The Chancellor today used the first Labour Budget in almost 15 years to hike National Insurance contributions from businesses by 1.2 per cent – in a £25bn raid on firms.
The extra levy is the equivalent of £800 per employee, while investment firm AJ Bell said the cost of hiring a new staff member would rise by £2,300.
The first female Chancellor also announced a reduction to the threshold businesses start paying NICs from £9,100 to £5,000.
It raised fears that workers will bear the brunt of the increase and sparked accusations it breaches the party’s manifesto pledge not to raise taxes for working people.
The National Living Wage will also rise by more than six per cent – triple the rate of inflation – to £12.21 an hour for over-21s.
It means millions will get a huge pay boost, though some firms say the rise will push up costs.
Meanwhile, the NHS will get a huge £22billion investment in a bid to fast-track improvements and reduce record-high waiting lists.
Business owners, tradies, students and workers across the country have given their verdict on the measures, telling The Sun that higher tax rates could trigger a string of consequences for their lives.
They include toolmaker Conrad Pearson, who warned Reeves’ measures would cost him to cut someone from his five-strong toolmaking team.
He said: “As soon as this was announced one of my lads said I’d have to pay him more, otherwise unskilled and less experienced staff would be catching him up.”
Chancellor of the Exchequer Rachel Reeves ahead of yesterday’s Budget[/caption]
