Sajid Javid, the chancellor, is planning to scrap promised tax cuts in next month’s budget, according to a report in the Financial Times. Tuesday’s U.K. public-sector borrowing figures showed the budget deficit between April and September totalled £40.3b, 22% higher than the same period last year.
The paper says Mr Javid’s first budget will focus on infrastructure and higher public spending. As a result of the tightening economic realities, Prime Minister Boris Johnson’s promise to cut tax for those earning over £50,000 is expected to be scrapped. His plans to move the tax band from £50,000 to £80,000 was set to cost the Treasury £8b. Other tax breaks in areas such as Inheritance Tax and Death Duties are also expected to be jettisoned.
The Office for National Statistics figures on the public-sector borrowing requirement were released on the same day as a survey that found public sentiment has shifted to more expenditure on public services. The research found that 58% of respondents believed that more should be spent on government services, according to Ipsos MORI data.
Comment
While 'the fog of brexit uncertainty' continues to dog all economic forecasters, it is unclear whether this change is more about a political party trying to broaden its appeal to more lower paid taxpayers than saving money. Many a politician has argued that cutting taxes for the higher paid is fiscally neutral.
