The latest update in the election race between the Labour and Conservative parties has been marked by a series of claims and counterclaims regarding potential tax increases. Amidst the flurry of numbers being thrown around, it is important to note that both parties have yet to release their manifestos, the official documents outlining their proposed policies.
Despite the lack of concrete plans, both sides have been making assumptions and accusations about what the other party intends to do if elected. This has led to a policy “no man’s land” where each side is guessing and sometimes making up information about the other’s proposed policies.
One such claim that has caused a stir is Rishi Sunak’s statement during a recent debate that Labour plans to raise taxes by £2,000 for every household. This number stems from a “dossier” released by the Conservative party last month, which estimated that Labour’s spending plans would leave a £39 billion hole to be filled by tax increases.
However, there have been objections raised about the accuracy of these calculations, as the Conservatives had access to Treasury civil servants to help with their estimates. Additionally, Labour has stated that the cost of their policies would not be as high as claimed by the Tories.
While the £2,000 figure may seem significant, it is actually a cumulative total over four years, with a more accurate annual figure being around £500. This is still a substantial amount, but it pales in comparison to the tax increases that have already been implemented by the Conservative government since 2019, averaging at £3,000 per household annually.
In response, Labour has released their own dossier, which makes even more outlandish assumptions about the Conservative party’s fiscal plans. This includes assuming that they will abolish National Insurance and inheritance tax immediately upon being elected. This would result in a £270 billion “black hole” over four years, or £14,000 per household.
In a tit-for-tat exchange, the Conservatives have also released a second dossier, making equally unrealistic assumptions about Labour’s policies, resulting in a potential £844 billion increase in taxes over four years, or a staggering £46,000 per household.
Despite the exaggerations and speculation, it is clear that both major parties are committed to tax increases in the coming years. The Office for Budget Responsibility has already predicted a significant increase in the tax burden, primarily due to inflation and rising wages.
However, until the manifestos are released, the specifics of these tax increases remain uncertain. For now, the numbers being tossed around by both parties should be taken with a grain of salt.
