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 16 | Version 17 |
|---|---|
| Tory leadership: Do rivals' tax pledges add up? | Tory leadership: Do rivals' tax pledges add up? |
| (4 days later) | |
| The remaining candidates in the race to be prime minister - Rishi Sunak and Liz Truss - have had heated exchanges about their plans for tax. | The remaining candidates in the race to be prime minister - Rishi Sunak and Liz Truss - have had heated exchanges about their plans for tax. |
| In a televised leadership debate on 17 July, former chancellor Mr Sunak accused rivals of pursuing "something-for-nothing economics", which he said "isn't Conservative". | In a televised leadership debate on 17 July, former chancellor Mr Sunak accused rivals of pursuing "something-for-nothing economics", which he said "isn't Conservative". |
| Foreign Secretary Liz Truss said that, under current plans, the tax burden will be raised "to the highest level in 70 years". | Foreign Secretary Liz Truss said that, under current plans, the tax burden will be raised "to the highest level in 70 years". |
| 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 |
| temporarily suspend green levies on energy bills (she claimed this would knock "around £150" off energy bills): £8.5bn a year | temporarily suspend green levies on energy bills (she claimed this would knock "around £150" off energy bills): £8.5bn a year |
| Total estimated cost of tax cuts: £38.5bn a year. | Total estimated cost of tax cuts: £38.5bn a year. |
| Extra spending on defence to cost £23bn by 2030. | Extra spending on defence to cost £23bn by 2030. |
| 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. |
| The government estimates that cancelling this rise would cost £17bn a year. | The government estimates that cancelling this rise would cost £17bn a year. |
| However, the IFS points out that doesn't take into account whether lowering tax could lead to increased investment by companies. | However, the IFS points out that doesn't take into account whether lowering tax could lead to increased investment by companies. |
| "We would therefore expect the long-run cost to be considerably lower than £17bn a year," the IFS said, "though the effect would certainly not be big enough for the tax cut to pay for itself". | "We would therefore expect the long-run cost to be considerably lower than £17bn a year," the IFS said, "though the effect would certainly not be big enough for the tax cut to pay for itself". |
| Green levies | Green levies |
| The government makes energy companies add an environmental and social element on to energy bills. This pays for things like schemes to help fund renewable energy and provide grants for insulation. | The government makes energy companies add an environmental and social element on to energy bills. This pays for things like schemes to help fund renewable energy and provide grants for insulation. |
| They make up about £153 of an average dual fuel bill, according to Ofgem. | They make up about £153 of an average dual fuel bill, according to Ofgem. |
| 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 said she is still committed to the net zero target, so is likely to have to fund the projects another way. | Ms Truss has said she is still committed to the net zero target, so is likely to have to fund the projects another way. |
| There is little detail of how she would fund all this, although she has said that she wants to pay off the government's Covid debt more slowly. | There is little detail of how she would fund all this, although she has said that she wants to pay off the government's Covid debt more slowly. |
| Spending | Spending |
| Ms Truss has made one specific spending pledge - to increase defence spending from its current level of 2.1% of GDP to 2.5% by 2026 and 3% by 2030. | Ms Truss has made one specific spending pledge - to increase defence spending from its current level of 2.1% of GDP to 2.5% by 2026 and 3% by 2030. |
| The IFS estimates that would mean an extra £23bn of spending at today's prices by 2030. | The IFS estimates that would mean an extra £23bn of spending at today's prices by 2030. |
| Rishi Sunak | Rishi Sunak |
| What has he pledged? | What has he pledged? |
| Reduce VAT on domestic energy bills from 5% to zero: £4.3bn | Reduce VAT on domestic energy bills from 5% to zero: £4.3bn |
| Cut 3p off income tax by late 2029: about £19bn | |
| Mr Sunak only resigned as chancellor on 5 July, so announcing wholesale changes to his own policies would be seen as politically problematic. | Mr 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 has promised to cut the rate of VAT on domestic fuel bills from 5% to zero for one year from October if it looks like average bills are going to rise above £3,000 a year. | |
| At the moment, the VAT costs £94 of an average bill. Mr Sunak says that his measure will save an average household £160 - although clearly it depends on how much the energy price cap rises by. | At the moment, the VAT costs £94 of an average bill. Mr Sunak says that his measure will save an average household £160 - although clearly it depends on how much the energy price cap rises by. |
| The cost of the policy would be about £4.3bn for the year, depending again on how much prices rise. | The cost of the policy would be about £4.3bn for the year, depending again on how much prices rise. |
| What is the energy price cap and how high will bills go? | What is the energy price cap and how high will bills go? |
| Could VAT on gas and electricity be cut to zero? | Could VAT on gas and electricity be cut to zero? |
| In May, Mr Sunak rejected the idea of a VAT cut, saying in Parliament: "A flat rate payment has the benefit of being more progressive than VAT, which obviously gives very high, or higher, tax discounts to those who are particularly wealthy or have large houses and energy bills." | In May, Mr Sunak rejected the idea of a VAT cut, saying in Parliament: "A flat rate payment has the benefit of being more progressive than VAT, which obviously gives very high, or higher, tax discounts to those who are particularly wealthy or have large houses and energy bills." |
| Cutting income tax | |
| When he was chancellor, Mr Sunak announced that income tax would come down from 20p in the pound to 19p in April 2024. | |
| He has now said he will cut another 3p in the pound by the end of the next Parliament, expected to be by the end of 2029. | |
| That's likely to cost in the region of £19bn a year. | |
| Mr Sunak said that would be funded by a combination of growth in the economy and lower spending, promising not to increase debt to fund it. | |
| But he has not specified where the cuts in spending would be. | |
| He hasn't come out with other detailed tax cuts yet, but says he wants "radical reforms" to the way businesses are taxed. | He hasn't come out with other detailed tax cuts yet, but says he wants "radical reforms" to the way businesses are taxed. |
| He plans to go ahead with increases to corporation tax, but says he is planning to bring in ways to make it cheaper for companies to invest at the same time. | He plans to go ahead with increases to corporation tax, but says he is planning to bring in ways to make it cheaper for companies to invest at the same time. |