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Chancellor Jeremy Hunt is unsure if the government can afford further tax cuts – as a National Insurance (NI) reduction comes into force today.
The pre-election cut to NI, from 12% to 10%, will impact around 27 million payroll employees across the UK.
A person earning the UK’s average salary of £35,000 will save £450 a year, or £37.38 a month, as a result of this change.
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See how much your pay will change
Mr Hunt said the reduction, announced in his Autumn Statement last year, means “that a typical family with two earners will be nearly a thousand pounds better off this year”.
But Labour argued this wasn’t true, saying frozen income tax and national insurance thresholds mean that many families have been drawn into higher tax bands.
The Opposition’s new attack ads criticising the policy even made it onto the Tory-supporting website Conservative Home on Friday.
Shadow chancellor Rachel Reeves said: “Under Rishi Sunak’s raw deal, for every extra £10 people are paying in tax they are only getting £2 back.”
‘If I can afford to go further I will’
In a statement on Saturday, Mr Hunt said he wanted to further ease the tax burden, which is expected to rise to the highest level since the Second World War before the end of this decade, but he doesn’t yet know if he can.
He called the NI reduction “the start of a process”, adding: “If I can afford to go further I will… I don’t yet know if I can.
“We want to do this because it helps families, it also helps to grow the economy, and we believe that a lightly taxed economy will grow faster and in the end that’ll mean more money for public services like the NHS.”
Mr Hunt argued the Conservative government “wants to bring down taxes” and recognises that “families are finding life really tough”.
But he defended its previous measures, saying: “It was right to support families through COVID and through…
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