The Conservative manifesto, launched on Sunday, opted for a safety first approach to tax, pledging no increases in income tax, national insurance or VAT. Their plans mostly bake in the cuts to public services we’ve seen over the last decade, with only a few limited spending increases.
Almost as interesting as what’s in the document, is what didn’t make the cut. Pre-election promises to cut taxes on the wealthy and companies were dropped. Rumours about changes to inheritance tax and stamp duty also didn’t materialise.
This shows how the centre of gravity on tax and public spend is moving leftwards. The manifesto even promises to limit the “arbitrary tax advantages for the wealthiest in society”. Boris Johnson and his team clearly felt that it would be bad politics to go into an election promising lots of giveaways to the well off.
It’s true that the big tax pledge of increasing the national insurance threshold from £8,500 to £9,500 will mostly benefit better off families. But this change will still be sold as a broad, and limited, tax cut.
The Conservatives have promised reviews of both business rates and entrepreneurs relief. Our Manifesto for Tax Equality highlighted how these are not fit for purpose, so it’s welcome to see action promised.
The manifesto also includes a number of welcome, but modest, measures to tackle tax avoidance and evasion. But unlike Labour, which is rethinking how to tax big global companies, the Conservatives have just reiterated their pledge to introduce a relatively modest tax on digital companies.
But with an ageing population, and growing pressure on public services, future governments are going to face huge pressure to spend more, and increase taxes to help support this. Given that most people haven’t had a pay rise in over a decade, any future tax rises should focus on those who best able to pay.
Labour’s detailed plan to crack down on tax evasion and avoidance is welcome.
The public is fed up of endless stories about big companies or wealthy individuals paying so little in tax. Reducing tax avoidance by multinational companies is hard. Labour is taking the right approach by reforming the way in which global companies are taxed in the first place.
Labour’s Fair Tax Programme includes many of 33 policies in Tax Justice UK’s Manifesto for Tax Equality including:
All main parties are now making promises to crack down on tax avoidance, but as always the proof will be in the pudding. We will be holding politicians of all parties to account to ensure they deliver on their promises.
Labour has promised to tax income from wealth at the same level as income from work in its manifesto launched today. This has been a key demand of Tax Justice UK.
Taxing income from wealth at the same level as income from work would raise £14 billion a year according to the party’s costings. Labour plan to do this by taxing capital gains and dividends at the same rate as income tax.
We’ve been campaigning hard with Oxfam and the Institute of Public Policy Research for this change and it was a key element of our manifesto for tax equality. A recent opinion poll we commissioned with YouGov found that almost 70% of the public backed the measure.
The manifesto also promises a clamp down on avoidance and evasion whilst committing to review of the bloated system of tax reliefs, an issue we highlighted in our Inheritance Tax report last summer. It also reiterates the party’s commitment to reforming how global companies are taxed.
However, Labour has pulled its punches in other areas. The party has promised to change some of the rates on inheritance tax and council tax, but it has failed to engage with the fundamental reform that is needed to bring these taxes into the 21st century.
Have a look at our analysis of tax pledges from the Conservatives, Lib Dems and the Greens.
Read our analysis of the full Conservative Party manifesto here.
Tax took centre stage this week as Boris Johnson confirmed his well trailed plan to raise the National Insurance threshold.
In an unguarded moment Mr Johnson let slip the Conservative manifesto will include a promise to raise the National Insurance tax free allowance from £8,600 to £12,500.
The Institute for Fiscal Studies estimate that such a change would cost £11bn a year and would largely benefit higher earning households.
Depending on how the policy is implemented, the poorest workers could see up to 63% of the tax cut clawed back through a reduction in their Universal Credit payments.
Increasing the National Insurance threshold is a badly designed way to help those on the lowest incomes. It would be much better to reverse some of the £12bn in benefit cuts announced in 2015.
Elsewhere there was a mixed bag of tax promises from the Greens and Liberal Democrats when their election manifestos launched.
We were pleased to see many ideas from our manifesto for tax equality picked up by the two parties.
The Green Party promised to tax income from wealth the same as income from work, raise corporation tax to 24% and replace the increasingly unfair council tax with a land value tax, measures that reflect our priorities.
However, Tax Justice UK advisor, Richard Murphy, cautioned that the Greens’ plan for a £76 billion carbon tax would need to avoid hitting the poor hardest.
The Liberal Democrats pledged to end the tax free allowance on capital gains and to raise corporation tax to 20%. Their manifesto included an oft-repeated promise to put a penny on income tax and ‘increase’ the digital services tax. It includes welcome measures to crack down to tax avoidance.
Today, at the start of the 2019 general election, we set out 33 policies for tax justice.
After ten years of cuts to public spending, there is now widespread consensus that more investment in public services is required. In this election, all of the main political parties are committing to major increases in public spending.
We're calling on politicians to address tax inequality, curb tax avoidance and improve the administration of the tax system. We want to restore people’s sense of having a stake in the system.
Our manifesto sets out costed policies that could raise £69 billion. It also includes measures where detailed costings are unavailable which could raise significantly more.
The manifesto was put together with Taxwatch UK and is endorsed by the Equality Trust, Tax Research UK, the Women’s Budget Group, Church Action on Tax Justice and Jolyon Maugham, QC. We worked with leading academics, researchers and campaigners to develop the set of proposals.
Our manifesto urges politicians to:
Deal with tax inequality
Curb tax avoidance and evasion
Make tax accountable
Download the manifesto: