This article is from the source 'bbc' and was first published or seen on . The next check for changes will be
You can find the current article at its original source at https://www.bbc.co.uk/news/uk-politics-62122166
The article has changed 22 times. There is an RSS feed of changes available.
| Version 12 | Version 13 |
|---|---|
| Tory leadership: Do rivals' tax pledges add up? | Tory leadership: Do rivals' tax pledges add up? |
| (about 7 hours later) | |
| There have been heated exchanges about tax between the candidates for the Conservative leadership. | There have been heated exchanges about tax between the candidates for the Conservative leadership. |
| Former chancellor Rishi Sunak accused his rivals of pursuing "something-for-nothing economics", which he said "isn't Conservative". | Former chancellor Rishi Sunak accused his rivals of pursuing "something-for-nothing economics", which he said "isn't Conservative". |
| Foreign Secretary Liz Truss pointed out that, under current plans, the tax burden will be raised "to the highest level in 70 years". | Foreign Secretary Liz Truss pointed out that, under current plans, the tax burden will be raised "to the highest level in 70 years". |
| Most of the candidates are pledging specific tax cuts but haven't gone into detail about whether they would pay for any shortfall in government finances with extra borrowing or cuts to public spending, instead emphasising that they would grow the economy and thus increase government revenues. | Most of the candidates are pledging specific tax cuts but haven't gone into detail about whether they would pay for any shortfall in government finances with extra borrowing or cuts to public spending, instead emphasising that they would grow the economy and thus increase government revenues. |
| So what taxes would they cut and what's the estimated cost? | So what taxes would they cut and what's the estimated cost? |
| Who could be the next prime minister? | Who could be the next prime minister? |
| When will we know who the new PM is? | When will we know who the new PM is? |
| Liz Truss | Liz Truss |
| What has she pledged and how much would it cost? | What has she pledged and how much would it cost? |
| scrap April's National Insurance rise: £13bn a year | scrap April's National Insurance rise: £13bn a year |
| cancel planned corporation tax rise (due to go from 19% to 25% in April 2023): £17bn a year | cancel planned corporation tax rise (due to go from 19% to 25% in April 2023): £17bn a year |
| suspend green levies on energy bills (in the Friday debate she claimed it would knock "around £150" off energy bills): £8.5bn a year | suspend green levies on energy bills (in the Friday debate she claimed it would knock "around £150" off energy bills): £8.5bn a year |
| Total estimated cost: £38.5bn a year | Total estimated cost: £38.5bn a year |
| Analysis | Analysis |
| National Insurance (NI) is a tax on earnings and self-employed profits - paid by all workers, until they reach the state pension age. It is also paid by employers. | National Insurance (NI) is a tax on earnings and self-employed profits - paid by all workers, until they reach the state pension age. It is also paid by employers. |
| Since April, they have been paying more in NI - an extra 1.25p in the pound. The rise - announced by Mr Sunak when he was chancellor - was initially to help the NHS clear its backlog and then to help fund social care. | Since April, they have been paying more in NI - an extra 1.25p in the pound. The rise - announced by Mr Sunak when he was chancellor - was initially to help the NHS clear its backlog and then to help fund social care. |
| To try to ease the impact of the changes, Mr Sunak then raised the threshold at which employees people start paying NI from £9,880 to £12,570 a year. | To try to ease the impact of the changes, Mr Sunak then raised the threshold at which employees people start paying NI from £9,880 to £12,570 a year. |
| National Insurance: Will tax changes save me money? | National Insurance: Will tax changes save me money? |
| Reversing the NI rise would cost about £13bn a year, according to the Institute for Fiscal Studies (IFS), the economic think tank. | Reversing the NI rise would cost about £13bn a year, according to the Institute for Fiscal Studies (IFS), the economic think tank. |
| Carl Emmerson, the IFS deputy director, said cuts to personal taxes such as NI "certainly won't be paying for themselves". He said while such tax cuts would put "more money in people's pockets", they risked contributing to inflation. | Carl Emmerson, the IFS deputy director, said cuts to personal taxes such as NI "certainly won't be paying for themselves". He said while such tax cuts would put "more money in people's pockets", they risked contributing to inflation. |
| Corporation tax is a tax on the profits of businesses. | Corporation tax is a tax on the profits of businesses. |
| The tax rate is currently 19% but it is due to increase to 25% in April 2023. | The tax rate is currently 19% but it is due to increase to 25% in April 2023. |
| IFS economist Stuart Adam calculates that cancelling this rise would cost £17bn a year. But the IFS says the annual cost doesn't allow for whether the corporation tax cut could lead to increased investment in the UK, which could make the final bill "substantially lower - though not enough for the tax cut to pay for itself". | IFS economist Stuart Adam calculates that cancelling this rise would cost £17bn a year. But the IFS says the annual cost doesn't allow for whether the corporation tax cut could lead to increased investment in the UK, which could make the final bill "substantially lower - though not enough for the tax cut to pay for itself". |
| Green levies | Green levies |
| The government makes energy companies add environmental and social obligations onto energy bills to pay for things like schemes to help fund renewable energy schemes and provide grants for insulation. | The government makes energy companies add environmental and social obligations onto energy bills to pay for things like schemes to help fund renewable energy schemes and provide grants for insulation. |
| They make up about 15% of an average energy bill. | They make up about 15% of an average energy bill. |
| In 2020-21, those levies raised £12.2bn, of which about 70% (£8.5bn) went on environmental programmes. | In 2020-21, those levies raised £12.2bn, of which about 70% (£8.5bn) went on environmental programmes. |
| Ms Truss has not specified whether she would scrap those projects or fund them another way. | Ms Truss has not specified whether she would scrap those projects or fund them another way. |
| There is also little detail of how she would fund all this, although it has been reported that she wants to pay off the government's Covid debt more slowly. | There is also little detail of how she would fund all this, although it has been reported that she wants to pay off the government's Covid debt more slowly. |
| Trade minister Penny Mordaunt has been MP for Portsmouth North since 2010. | Trade minister Penny Mordaunt has been MP for Portsmouth North since 2010. |
| Penny Mordaunt | Penny Mordaunt |
| What has she pledged and how much would it cost? | What has she pledged and how much would it cost? |
| increase income tax thresholds for basic and middle income earners in line with inflation: an estimated £2.9bn in 2022/23, rising to £18bn by 2025/26 | increase income tax thresholds for basic and middle income earners in line with inflation: an estimated £2.9bn in 2022/23, rising to £18bn by 2025/26 |
| cut VAT on fuel from 20% to 10%: at least £5bn | cut VAT on fuel from 20% to 10%: at least £5bn |
| suspend green levies on energy bills: £8.5bn a year | suspend green levies on energy bills: £8.5bn a year |
| Total estimated cost: £16.4bn in the first year, rising in the following years | Total estimated cost: £16.4bn in the first year, rising in the following years |
| Analysis | Analysis |
| The basic rate of income tax is currently 20p in the pound and is paid on earnings between £12,571 and £50,270 (except in Scotland where there are different arrangements). | The basic rate of income tax is currently 20p in the pound and is paid on earnings between £12,571 and £50,270 (except in Scotland where there are different arrangements). |
| This rises to 40p in the pound for earnings above £50,270 and 45p in the pound for earnings over £150,000. | This rises to 40p in the pound for earnings above £50,270 and 45p in the pound for earnings over £150,000. |
| Rishi Sunak announced a reduction in the basic rate to 19p but not until 2024. | Rishi Sunak announced a reduction in the basic rate to 19p but not until 2024. |
| The thresholds - the point at which people start paying the tax or paying it at a higher rate - are currently frozen for four years from April 2022. This means when people get a pay rise they can be dragged into paying a higher rate, raising more revenue for the government. | The thresholds - the point at which people start paying the tax or paying it at a higher rate - are currently frozen for four years from April 2022. This means when people get a pay rise they can be dragged into paying a higher rate, raising more revenue for the government. |
| According to OBR estimates, the income tax threshold freeze is forecast to raise £2.9bn in 2022/23, rising to £18bn by 2025/26. Scrapping this could mean billions of pounds less in tax revenue for the government. | According to OBR estimates, the income tax threshold freeze is forecast to raise £2.9bn in 2022/23, rising to £18bn by 2025/26. Scrapping this could mean billions of pounds less in tax revenue for the government. |
| Of course, by the time the new prime minister is in place, we will already be half way through the tax year, so the impact would fall more in 2023-24. | Of course, by the time the new prime minister is in place, we will already be half way through the tax year, so the impact would fall more in 2023-24. |
| The government charges two types of tax on petrol and diesel: fuel duty is 52.95p a litre and there is VAT on top of that at 20%. | The government charges two types of tax on petrol and diesel: fuel duty is 52.95p a litre and there is VAT on top of that at 20%. |
| The OBR expects fuel duties to have raised about £26.2bn in 2022-23, but we do not have that broken down into VAT and fuel duty. | The OBR expects fuel duties to have raised about £26.2bn in 2022-23, but we do not have that broken down into VAT and fuel duty. |
| Ms Mordaunt wants to cut the VAT from 20% to 10%. We've made a rough estimate, using price and consumption data, that VAT on petrol and diesel raised about £10bn in 2021, so we can say that halving the VAT would cost the exchequer at least £5bn. Rising fuel prices mean it could be considerably more than that. | Ms Mordaunt wants to cut the VAT from 20% to 10%. We've made a rough estimate, using price and consumption data, that VAT on petrol and diesel raised about £10bn in 2021, so we can say that halving the VAT would cost the exchequer at least £5bn. Rising fuel prices mean it could be considerably more than that. |
| Ms Mordaunt said on the BBC's Sunday Morning programme that she would be prepared to borrow more money to fund her plans. | Ms Mordaunt said on the BBC's Sunday Morning programme that she would be prepared to borrow more money to fund her plans. |
| Asked if she would be prepared to borrow to fund day-to-day spending (as opposed to investment) she said, "Yes we will, we will have to do that for some time." | Asked if she would be prepared to borrow to fund day-to-day spending (as opposed to investment) she said, "Yes we will, we will have to do that for some time." |
| Rishi Sunak | Rishi Sunak |
| What has he pledged? | What has he pledged? |
| Rishi Sunak only resigned as chancellor on 5 July, so announcing wholesale changes to his own policies would be seen as politically problematic. | Rishi Sunak only resigned as chancellor on 5 July, so announcing wholesale changes to his own policies would be seen as politically problematic. |
| He launched his leadership bid, saying: "Once we have gripped inflation, I will get the tax burden down. It is a question of 'when', not 'if'." | He launched his leadership bid, saying: "Once we have gripped inflation, I will get the tax burden down. It is a question of 'when', not 'if'." |
| He hasn't come out with detailed tax cuts yet but says he wants "radical reforms" to the way businesses are taxed. | He hasn't come out with detailed tax cuts yet but says he wants "radical reforms" to the way businesses are taxed. |