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Prime Minister Boris Johnson and his Government are are being urged to scrap a planned £12billion tax rise in April amid growing fears it could send the cost of living for millions of Britons spiralling out of control. There are fears the 1.25 percent rise in National Insurance contributions, which aims to pump money into the NHS and social, can’t be justified at a time of rising inflation and soaring energy bills. A number of Tory MPs are pressing Chancellor Mr Sunak to to scrap VAT and so-called “green levies” from household energy bills.<\/p>\n
From April, surging wholesale gas prices could see the price cap on average household bills jump from £1,277 to as high as £2,000.<\/p>\n
The recent tax rise announcements from Mr Sunak mean Britain is now on course for its highest overall tax burden since 1950, but the Chancellor has insisted he wants to cut taxes before any general election takes place.<\/p>\n
Now Sir John Redwood, the Conservative MP for Wokingham in Berkshire, has claimed the Treasury has overstated the country’s deficit by tens of billions of pounds over the past two years.<\/p>\n
This, he claimed, means the incoming tax rises taking effect from April are not required.<\/p>\n
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Sir John wrote on Twitter: “The Treasury overstated the deficit by more than £60billion last year and by another £50billion this year in their budget forecasts.<\/p>\n
“So they do not need the big tax rises they threaten for April.”<\/p>\n
The warning from the Tory MP comes after financial experts warned tax hikes and soaring bills will deliver the biggest shock to household incomes for almost half a century.<\/p>\n
Recent calculations from the Institute for Fiscal Studies (IFS) show a person earning £30,000 will see their take-home pay plummet by £1,660 because of rising living costs, stagnant wages and tax increases.<\/p>\n
This effective pay cut includes paying £250 more in national insurance contributions and £150 more in income tax.<\/p>\n
In addition, the IFS calculated someone earning £15,000 a year will take an £860 hit to their real income after tax.<\/p>\n
George Dibb, head of the IPPR’s Centre for Economic Justice, warned: “There is a real risk that poorly designed tax rises combined with lower economic growth will prove a dangerous combination for both household budgets and the nation’s finances.<\/p>\n
“The UK is facing a sustained cost of living crisis where incomes could be hit even harder than the financial crash of 2008.<\/p>\n
DON’T MISS<\/strong> “If this proves to be the case you have to look back as far as the 1970s to find a worse shock to households’ real disposable income.”<\/p>\n Frank van Lerven of the New Economics Foundation warned households throughout the country are already approaching the current crisis in a financially vulnerable position because of more than a decade without a real increase in average earnings.<\/p>\n The think tank calculated around 21.4 million people are living below a socially acceptable living standard and don’t expect real wages to recover to their 2008 level until the end of 2028.<\/p>\n Mr van Lerven said: “A multitude of different dynamics will all hit households at the same time – a new coronavirus wave, falling real wages and huge energy price rises.<\/p>\n “Alongside that, we still haven’t recovered from the previous crisis and we are still coming to grips with the consequences of exiting the European Union.”<\/p>\n Express.co.uk has contacted the Treasury for comment.<\/p>\n
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