Andy Burnham’s income tax proposals could result in two million people jobless, experts have cautioned. The Labour MP for Makerfield, who is widely tipped to become the next Prime Minister, has suggested there is “room” to increase taxes under his leadership.
However, the independent watchdog, the Office for Budget Responsibility, has warned that should future governments raise income tax thresholds in line with prices rather than wages, two-thirds of all workers – equivalent to more than 20 million people – could become higher-rate taxpayers within several decades, reports Birmingham Live.
Rishi Sunak, the former Prime Minister, during his tenure in the Conservative government to freeze income tax thresholds until 2028. Current Chancellor Rachel Reeves, who is widely anticipated to be succeeded by Ed Miliband under a Burnham premiership, has since prolonged the policy until the beginning of the next decade.
The OBR estimated “labour supply could fall by around two million” workers by 2075. It further observed that even if governments resumed increasing tax thresholds in line with inflation for the following 50 years, this would still produce “very significant increases in personal tax rates”
has since prolonged the policy until the beginning of the next decade (Image: Getty)
David Miles, an executive member of the OBR, cautioned alongside the research: “It would be painful, because … if you carry on doing that decade after decade, it isn’t too far down the road until the great majority of people are higher rate taxpayers.”
This would consequently affect people’s “willingness to work, willingness to stay in the UK [and] to save, to pay taxes if income tax rates rose by that amount. So it’s not a painless road to go down”, he added.
“It used to be the case that the UK was a relatively low tax country relative to continental Europe,” said Miles.d is making a very significant contribution to that upward pressure on spending.”
During a conversation with LBC presenter Andrew Marr, Burnham insisted that Greater Manchester’s finances had been “rock solid” throughout his tenure as mayor, while highlighting his former role as a Treasury minister under the previous Labour administration.
He said: “I stick by the manifesto and the promises that it made. So, let me be absolutely clear about that, but there is some room within that manifesto for movement on tax.”