Kate Andrews Kate Andrews

Johnson’s tax hike won’t fix social care

Paul Edwards / WPA Pool / Getty Images

Another day, another tax hike. This is presumably not how Boris Johnson saw his first term in office going; he’s reneged on manifesto promises left and right, including one that defines modern Conservatism: a healthy scepticism of tax rises. The new health and social care levy of 1.25 per cent for employers and employees (so, really, a 2.5 per cent levy) is now part of an emerging trend. This is not a one-off tax, but the follow-on from a March Budget that included £25 billion worth of tax hikes.

In fact, it’s record-breaking. The levy is estimated to raise an additional £12 billion a year extra for the Treasury’s coffers. Combine that with March’s personal allowance tax freeze and corporation tax hike, and the Institute for Fiscal Studies estimates that Boris Johnson’s government has raised the tax burden to its ‘highest ever sustained level’ – that is, record levels of peacetime spending.

A bigger state is here to stay, and Johnson isn’t shying away from it. The Prime Minister opted not only to raise NI, but to increase the dividend rate by 1.25 per cent too. The bulk of the money is going to address the NHS backlog over the next few years, and with it, a promise to increase NHS capacity to 110 per cent, and deliver 30 per cent more elective procedures by 2024/25 than were taking place before the pandemic hit.

The NI increase is not the only manifesto promise scrapped today. It was also announced that the triple-lock on pensions is being suspended from 2022-2023. The move comes as statistical anomalies created by the pandemic would have led to an 8 per cent increase in the state pension, as a result of lots of young people losing their jobs due to lockdown.

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