Published On: Thu, Nov 7th, 2019

Labour’s plans to increase income tax could lose taxpayers up to ‘£22.5 billion’ | Personal Finance | Finance

Campaign manager for TaxPayers’ Alliance, Duncan Simpson, spoke to about the “very popular” policy of cutting income tax. Income Tax is a tax you pay on your earnings, varying with respective income or profits. The Labour Party have announced plans to increase the rates of income tax to 45 percent for income over £80,000 and 50 percent over £123,000.

Mr Simpson told that a “strong” cut to the basic rate of income tax could save the taxpayer as much as “£22.5billion” by next year.

He said: “Principally, whatever kind of outcome there is for Brexit between now and the end of January, we think income tax needs to be a pretty high priority.

“There are different methods of doing that, but if the Government were to do one or two things.

“Either cut the basic rate, which is 20 percent in the pound above the personal allowance.”

READ MORE: Labour’s 4-day week plan would ‘wreck’ UK economy warns expert

He continued: “Cut it from 20 percent to 18 percent, which would be a more moderate response.

“A more strong response would be 15 percent.

“If it’s the former option, we estimate that the impact on receipts would be about £9billion by next year.

“And if it’s down to 15 percent, it would be more than double that at £22.5billion.”

The tax expert also railed against Labour’s “dangerous” plans to hike up corporation tax to around 26 percent, the levels it was around 2010.

He told “I think the policy of increasing corporation tax is generally not advisable.

“In a literal sense it is businesses who pay corporation tax.

“But in reality, it’s a combination of workers through lower salaries and share holders who risk their money to put into companies who have lower dividends and lower returns.

“And then it’s also consumers who pay more through shop prices and services and goods.”

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