Why not tax the very rich and internet giants to ease the pain of ordinary people?

Helen Goodman in Spennymoor Picture: SARAH CALDECOTT.

A SECOND budget in two months, with a screeching U-turn Lewis Hamilton would be proud of as we’ve gone from the biggest tax cuts ever to the highest tax burden since the end of the Second World War! What is going on?

After Kwasi Kwarteng’s budget six weeks ago we saw a collapse in market confidence and the pound fall out of bed, necessitating interest rates hikes and even more upward pressure on inflation. The Truss government collapsed and a new regime under Rishi Sunak and Jeremy Hunt has come in with a totally different set of priorities. Instead of growth, growth, growth, we have stability, sound money and balancing the budget.

On the plus side the markets have stopped gyrating; the numbers add up and are consistent with an independent forecast. Inflation is forecast to come down in the middle of next year (because the oil price hike following Russia’s invasion of Ukraine will be more than a year old and so not in the inflation figure which is measured on a 12 month basis).

The problem is that the Chancellor’s route to getting the Government’s budget into order is at the expense of everyone in the country.

Over the next two years real household income will fall by seven per cent – ​​that’s equivalent to a loss in spending power of £1,700 for the average household. That is a bigger drop than we’ve seen since 1956. There will not be a single Northern Echo reader who does not feel this.

The Chancellor has split the pain roughly equally between spending cuts (£30bn) and tax rises (£25bn). But he’s delayed the spending cuts till after the next election. After 10 years of austerity – as anyone who has not got their driving license or passport on time or helped at the local foodbank knows – big reductions now are not possible. But government and council budgets do face the same high inflation as individuals, so don’t expect to see more police and do expect a rise in your council tax next spring.

What Mr. Hunt has done now is raise taxes. And this is my major criticism of his strategy. It’s not just what he has done – stealth taxes, freezing the level at which you start to pay income tax and national insurance which raises £8bn per year for the Exchequer – which really squeezes middle income earners.

It’s what he hasn’t done.

He hasn’t tackled loopholes used by the very rich – the non-dom exemption; the higher tax relief they get on pension contributions; the lower taxes on money made from buying and selling shares compared to working for a living; the private schools’ exemption from taxes which ordinary state schools have to pay.

He could have kept the tax up on banks and introduced fair taxes on the internet giants. Had he done these things he could have raised about £45bn!

He could have used these revenues to ease the pain for households or to restore public services. Harold Wilson said: “Politics is the language of priorities.” This Tory Government has prioritized the wealthy over ordinary working households.

For us in the North East, this is particularly bad, because we do not have many of these very wealthy people. Our local economy depends on ordinary people having spare cash to spend in local shops on our high streets.