25 Jun 2019
Tax cuts proposed by Boris Johnson to benefit the wealthier 10%
Boris Johnson recently announced his tax proposal, which, according to the Institute for Fiscal Studies (IFS), would cost billions and mainly benefit the wealthier part of the population the most.
Currently, the front-runner in the race to lead the Conservative Party, Mr Johnson has outlined plans to increase the threshold for the highest rate of income tax to £80,000. This would cost £9 billion and benefit mainly the richest 10% households in Britain.
The IFS remarked that the proposal by Johnson was expensive and potentially incompatible with the promise made by the Tories to end austerity and safely manage the public finances.
Research economist at the IFS, Tom Waters, said:
“It is not clear that spending such sums on tax cuts is compatible with both ending austerity in public spending and prudent management of the public finances.”
The proposal has been intensely criticised as a giveaway for the rich, driving up inequality.
A study by IFS showed that the higher rate of tax would take around two and a half million people out of the top income tax bracket. Top earners would gain an average £2,500 a year.
In the short run only 8% of the population are set to benefit.
The study also reported the number of people falling into the higher tax bracket had increased over time, 170% since 1990. Johnson’s policy would slash the numbers by a third, to the lowest level since 1990.
IFS said increases to tax credits would be a more effective way to help low income households.
Mr Johnson is running against Jeremy Hunt in a vote by Conservative party members to be chosen as the next party leader and to take over from Theresa May as prime minister.
Mr Hunt has said he is in favour of a plan to cut the tax on company profits from 17% to 12.5% from 2020.