Labour hint at income tax threshold change with attack on Tories
Labour has hinted it could consider reforming income tax thresholds after launching an attack on the Government for not doing so.
The party launched a “Tory tax calculator” which tells users how much extra they will have paid in tax, due to the freeze in thresholds.
The calculator, used in social media ads and targeted at people searching about their taxes, shows users how much more they would take home if income tax thresholds increased line with inflation rather than having been frozen.
Shadow Chancellor Rachel Reeves has previously criticised the Tories for enacting a “stealth tax” but did not commit to increasing the thresholds to allow people to keep more of their pay increases.
In November she said that Labour would not increase taxes but could not be more specific about the party’s policy plan at that time. “If I made a pledge to cut taxes, then I would absolutely show you where the money is going to come from,” she said.
Labour sources said the party was not calling for a tax cut at present and would set out its fiscal policies closer to the election.
But the launch of the new attack tool indicates Labour could be poised to make tax thresholds a key issue in the election.
And it prepares the ground for an election campaign expected to be focused heavily on cost of living and high taxes.
Sources said the Tories were arguing that taxpayers are being rewarded with a tax cut this year when the tax burden is actually the highest on record.
Income tax thresholds have been frozen until 2027/28 which means, as wages increase, millions more people will be pulled into higher tax bands – a process known as fiscal drag.
Analysis by the Resolution Foundation think-tank estimated taxpayers would be paying £40bn more a year in tax by 2028 as a result.
James Murray, Labour’s shadow Financial Secretary, said: “After 14 years of economic failure under the Conservatives, working people are worse off, with wages flatlining and taxes up.
“The tax burden is now set to be the highest on record, with 25 Tory tax rises since the last election alone.
“Never before have working people been asked to pay so much and get so little back. It is time for change. We need an election now to give the British public the chance to vote for a changed Labour Party that will change Britain for the better.”
