Fraser Nelson Fraser Nelson

Fact check: Sunak’s ‘tax cut’ claims

(Photo by Andy Buchanan - WPA Pool/Getty Images)

Rishi Sunak seems to have a New Year’s resolution: to claim that taxes are falling and say it so often that people start to believe him rather than their own lying payslip. He says that the last Budget was the biggest tax-cutting event since the 1980s, etc. He tells today’s Sunday Telegraph that more welfare reform will allow him to cut taxes even more. I was on the panel after he spoke on Laura Kuenssberg’s BBC1 show and said was stretching the truth a bit too much.

For every £1 cut by his National Insurance tax reductions (which have now come into effect) he is raising £4 by stealth taxes. Freezing the thresholds and allowances etc rather than lift them in line with earnings or inflation is a massive tax rise: it takes four million more into income tax, three million more into the higher rate, 400,000 more into the top rate. Add taxes you pay indirectly and the picture looks like the below: taxes rising, really rather quickly, to the highest they have been in UK peacetime history.

Now to what he told Laura Kuenssberg this morning:

Claim: £450 tax cut for average earners

The Chancellor has just announced £20 billion of tax cuts that came in this weekend. For someone earning £35,000, that’s a tax cut worth £450 a year. And that all of that shows to me that we have made progress. The plan is working. We’re starting to deliver the long term change that our country needs.

On its own, the NI cut does mean a £450 tax cut. But the stealth taxes - income tax and NIC thresholds and allowances frozen - lower the tax cut to £130. (The IFS has done the sums here.) By focusing only on the NI and ignoring the stealth tax effect, Sunak is telling only half of the story.

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