IFS: Millions in Britain ‘face stealth tax raid’ under Liz Truss’s plans

theguardian.com:

Millions of households are facing a “stealth” tax raid under Liz Truss’s government despite her promise to support workers through the cost-of-living crisis by lowering their tax bills, Britain’s leading economic thinktank said on Wednesday.

The Institute for Fiscal Studies (IFS) has calculated that for every £1 given to workers by cutting headline tax rates, £2 was being taken away through a freeze on the level at which people begin paying tax on their earnings.

When taken with plans for benefits, the IFS said the poorest in Britain would see their incomes hit hardest over the next three years. While the richest 10% of households will benefit by £2,290 a year on average from cuts to national insurance and income tax, the poorest will benefit by just £13.

Truss used her speech to the Conservative party conference in Birmingham on Wednesday to argue tax cuts could help to kickstart the economy after more than a decade of faltering growth.

Tax as a share of national income is approaching the highest levels in 70 years as public services come under growing demand from an ageing population, as well as weak economic growth – exacerbated by the Covid pandemic, Brexit and failure to make productivity gains since the 2008 financial crisis.

Promising a change of course under her leadership, the prime minister told party members: “We were told that we could nothing about it. I did not accept that things had to be this way.”

However, the IFS said attention-grabbing headline tax cuts would not offset other measures being used to bring in more revenue for the exchequer.

Under Truss’s plans, the national insurance rise introduced by Boris Johnson earlier this year will be reversed from next month, while the basic rate of income tax will be