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News UK UK Politics Basic rate of income tax to be cut to 19p by 2024, Rishi Sunak says ‘What is the possible justification for cutting income tax rate while raising NI rate?’ says IFS chief
Ashley Cowburn Political Correspondent
Wednesday 23 March 2022 10:28 EDT
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Subscribe Already subscribed? Log in Rishi Sunak announces basic rate Income tax will be cut to 19p
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Your support makes all the difference. Close Read more Rishi Sunak has said he will cut the basic rate of income tax from 20 to 19 pence in the pound before the end of the current Parliament, in 2024.
The chancellor’s announcement came as he again resisted calls to drop a hike in national insurance contributions by 1.25 percentage points from 1 April for the vast majority of workers.
But he also used the spring statement on Wednesday to increase the national insurance threshold by £3,000 , which he described as a “tax cut for employees worth over £330 a year”.
Turning his attention to the next general election, he told MPs a “clear goal” of Conservative chancellor’s has been to cut income tax, but said: “The fact this has only happened twice in 20 years tells you how hard it is to”.
“Covid and the war in Ukraine have only added to the difficulty of achieving this by the end of this Parliament.”
He added: “It would clearly be irresponsible to meet this ambition this year — and yet I refuse to let that ambition wither and drift.
“By 2024, the OBR currently expects inflation to be back under control, debt falling sustainably, and the economy growing. Our fiscal rules are met with a clear safety margin.
“So, my final announcement today is this: I can confirm, before the end of this Parliament, in 2024, for the first time in 16 years, the basic rate of income tax will be cut from 20 to 19p in the pound.
“A tax cut for workers, for pensioners, for savers. A £5 billion tax cut for 30 million people. It is fully costed and fully paid for in the plan announced today.”
But Paul Johnson, the director of the Institute for Fiscal Studies (IFS), said: “Oh for goodness sake. What is the possible justification for cutting income tax rate while raising NI rate?
“Drives further wedge between taxation of unearned income and earned income. Yet again benefits pensioner and those living off rents at expense of workers”.
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