Handouts for the rich, small change for the majority, and stealth tax for us all

If Jeremy Hunt's budget was supposed to be a pre-election fireworks show to boost dire Tory polling numbers, it's failed spectacularly.

Jeremy Hunt’s budget was hardly full of surprises given the way it’s become routine for the Tories to leak their headline policies to the press before they’re announced in parliament.

Most of the main announcements can be divided into three categories: handouts for the rich, small change for the majority, and stealth taxes for all.

Handouts for the rich

Increasing the ISA allowance by £5,000 to £25,000 is a blatant gift to the extremely rich. It hardly needs explaining that most of us don’t have more than twenty grand a year to stick in tax-free savings accounts.

Cutting Capital Gains tax on property from 28% to 24% is an absolutely brazen gift to property speculators and house-flippers. Given the housing crisis, the government should be clamping down on property hoarders, not handing them tax breaks on their unearned income.

Continuing the fuel duty freeze for another year is welcome news for drivers, but the evidence is clear that the majority of the £6 billion it will cost will accrue to the wealthiest in society, and it’s hardly good for the environment.

Raising the Child Benefit cut-off from £50,000 to £60,000 clearly only affects people on above average incomes. Hunt says he wants to consult on calculating the Child Benefit cut-off on household income rather than the income of the highest earner in the household, which would obviously be less unfair, but is it really worth all the effort to means test Child Benefit at all? It’s only since Child Benefit became means-tested that the government started using it as a weapon to punish parents who have more than the 2.05 kids needed to maintain a stable population.

Stealth taxes for all

Keeping the freeze on Income Tax allowances is a stealth tax because it forces people into higher tax bands even if their wages only increase by the rate of inflation. People are no better off in real terms, but the tax on their income still goes up.

The longer this stealth tax is applied, the greater the Income Tax burden becomes as a proportion of GDP.

Small change for the rest of us

Cutting National Insurance contributions by another 2% would have saved money for low earners if it wasn’t more than wiped out by Hunt’s stealth tax.

The overall impact of Hunt’s tax changes amount to a gift to middle-England and the extremely rich, while everyone else actually ends up worse off as a result of the stealth tax.

If Hunt genuinely wanted to make National Insurance a bit fairer, he could have scrapped the exemption that allows the extremely rich to dodge National Insurance by paying only 2% on earnings above £50,268. The more people earn above it, the lower the proportion of their salary goes on National Insurance payments.

It’s impossible to justify the fact that a banker or CEO on a multi-million pound salary has to pay a lower rate of National Insurance than a bin man or a bus driver.

Aside from the National Insurance cut that’s more than offset by the massive Income Tax stealth tax, there’s not much else for ordinary people to celebrate other than a freeze in alcohol duty.

Other stuff

There’s really not much to get excited about.

There’s a bit of funding for the arts which is welcome, but which amounts to a mere drop in the ocean compared to the destruction that Brexit has wreaked on British creative industries, and local government austerity cuts sending councils like Birmingham so bust that they’ve cancelled all support for the arts.

It’s hard to see Hunt’s logic in claiming that applying tax to vape liquids for refillable vapes will discourage kids from vaping. If discouraging kids was the real objective surely taking action on (environmentally ruinous) disposable vapes and those who sell them to kids would make more sense than a tax grab on refillable vapes?

Increasing the VAT registration threshold for small businesses from £85,000 to £90,000 will provide a tiny bit more headroom to avoid the masses of paperwork, but if it hadn’t been frozen at £85,000 for so long, and simply kept track with inflation, the paperwork would now be kicking in on turnovers of over £110,000 by now.

Air Passenger Duty is going up again, by 10% for premium and business class flights and 2% on short-haul flights. In reality tinkering with flight taxes isn’t going to achieve anything much when it’s still cheaper to fly between Britain’s major cities than getting the train.

On the subject of trains, Hunt had nothing to offer to improve Britain’s outdated, over-priced, and over-crowded rail network, and to add insult to injury there were huge delays and mass cancellations on the East Coast Mainline on the same day he had nothing to offer for rail commuters.

On the NHS Hunt has nothing to offer besides more of the "efficiency savings" that politicians keep on presenting as some kind of magical solution to the fact that we’ve got an aging population that needs more medical care. How gullible would you have to be to honestly believe that a bit of AI auto form filling is going to have a significant impact on the all-time record waiting lists?

In a desperate attempt to cause trouble for Labour Hunt announced a plan to get rid of the Non-Dom status that allows certain British residents (like Rishi Sunak’s wife) to dodge paying tax on overseas income. Scrapping Non-Dom status was one of the few economic policies that has survived Starmer’s mass abandonment of his own pledges and promises.

Given the impassioned Tory defences of Non-Dom status over the years, the decision to scrap it now, just before Labour’s seemingly inevitable election win looks like nothing more than a vindictive effort to allocate the money elsewhere before Labour can get their hands on it.

Hunt filled his budget speech with petty attacks and jibes against Labour and the Lib-Dems, but it’s hard to see any of it sticking given that the Tories are the ones that drove the UK into recession (a recession he didn’t mention during his budget speech).

And anyway, surely there’s plenty of other stuff to criticise Keir Starmer over beyond fat-shaming him after Peter Mandelson’s suggestion that he’s overweight.

Last chance saloon

If Hunt’s budget announcement was meant to be a Tory tour-de-force to give them a poll boost before the looming general election, it fell flat on its face.

There’s no headline policy to get everyone talking, the attacks and jibes were insipid, and anyone who has paid attention to the detail knows that it’s yet another example of the Tories giving with one hand and taking away even more with the other, while favouring the rich as they always do.

Hunt’s minimal efforts are not going to help them recover from the diabolical position they’ve put themselves in, so from now on we should expect even more extreme escalations in the Tory culture war rhetoric aimed at getting the extreme-right racist vote on board to save their skins, because now they’ve got nothing else left.