He [the Prime Minister] is Mr 25 tax rises"
In recent weeks, Labour politicians have repeatedly claimed that there have been 25 tax increases since the Conservatives were re-elected in 2019.
On Sky News on 8 January 2023, for example, shadow environment secretary Steve Reed said “we’ve had 25 different Tory tax hikes since they won the last general election in 2019”, and “we’ve had 25 different tax rises under this government”.
Labour party leader Sir Keir Starmer has also made the same claim, most recently at Prime Minister’s Questions on 24 January, when he said Rishi Sunak was “Mr 25 tax rises”.
We’ve heard variations of this claim from many other Labour politicians too, including shadow Treasury ministers James Murray and Darren Jones, and other shadow ministers Justin Madders, Stephen Morgan and Lord Leong, as well as shadow exchequer secretary to the Treasury Lord Livermore, a Labour mayor and at least one backbench MP. The Labour Party has also repeatedly posted versions of the claim, on its website, on X (formerly Twitter), and on Facebook as recently as 20 January.
And these claims are similar to one made by Mr Starmer in April 2023, when he said there had been “24 tax rises since 2019”, and “24 Tory tax rises in three years”.
What tax rises are on Labour’s list?
Full Fact has contacted the Labour party press office on several occasions to ask for the evidence behind this widely shared claim, but haven’t had any response. We’ve also not seen Labour’s list of 25 tax rises published anywhere. Political parties should ensure they back up their claims with evidence and be transparent about sources and calculations.
However, what appears to be the list has been shared with us by Lord Livermore, who sent it to us when we contacted him about his use of the figure. (We contacted all the politicians behind the repeats of this claim listed above—the others referred us back to the Labour press office or website, or did not reply.)
Here is the list provided by Lord Livermore:
- Council tax measures announced spending round 2020
- Reduction in entrepreneurs’ relief for CGT [Capital Gains Tax] announced at Budget 2020
- Corporation tax increase Budget 2020
- Income tax personal allowance freeze Budget 2021
- Inheritance tax threshold freeze Budget 2021
- CGT [Capital Gains Tax] annual exempt allowance freeze Budget 2021
- VAT registration threshold for business freeze Budget 2021
- Dividend tax autumn Budget 2021
- Freeze in starting rate band for savings tax Autumn Budget 2021
- Freeze in adult ISA [Individual Savings Accounts] subscription limit autumn Budget 2021
- Income tax basis period reform Autumn Budget 2021
- Council tax measures Autumn Budget 2021
- Freeze in student loan repayment threshold announced January 2022
- Increase in Bank Surcharge in September 2022 mini-Budget
- Increase in income tax rate in October 2022 mini-Budget U-turn
- Council tax measures Autumn Statement 2022
- Income tax/National Insurance thresholds frozen Autumn Statement 2022
- Inheritance tax threshold freeze Autumn Statement 2022
- Income tax Dividend Allowance reduced Autumn Statement 2022
- Income tax additional rate threshold reduced Autumn Statement 2022
- Capital Gains Tax reduced annual exempt amount Autumn Statement 2022
- National Insurance employer threshold frozen Autumn Statement 2022
- VAT registration threshold frozen Autumn Statement 2022
- Individual Savings Accounts: maintain annual subscription limit at £20,000 for 2023-24 Budget 2023
- Starting rate limit for savings income: maintain at £5,000 for 2023-24 Budget 2023
The Labour party press office again didn’t reply when we asked it to confirm this was the list behind its claim. But it appears to be—some of the examples match those quoted by Politico’s London Playbook earlier this month in relation to the list.
Because the Labour party press office hasn’t responded to our questions on how the list was compiled, we don’t know on what basis it decided to count tax changes.
However the list of 25 rises covers a range of measures, some of which affect individuals, others households or businesses. It also includes different types of tax measures, such as freezes to various tax rates (which taken literally might not appear to be a ‘tax rise’, but over time result in more people paying tax, or paying tax at a higher rate), and reductions in tax relief.
Is the list correct?
The 25 rises included in the list appear to reflect real tax changes broadly accurately, but there are some points worth noting on the measures which are counted.
Labour’s list includes three instances of “council tax measures”—it’s possible these refer to increases in the amount councils in England can raise council tax by without needing to hold a local referendum. If so, it’s worth noting this doesn’t represent the government itself raising council tax, as councils themselves decide changes to council tax for their residents. The government allowed councils to raise council tax by a higher maximum amount, but it wasn’t compulsory.
This list also appears to include a change to income tax that ultimately wasn’t implemented, the “increase in income tax rate in October 2022 mini-Budget U-turn”. In September 2022, then-chancellor Kwasi Kwarteng announced that the basic rate of income tax would decrease from 20% to 19%. When Rishi Sunak became Prime Minister the following month, this planned cut was cancelled before it was due to be introduced, so in practice the rate stayed the same, rather than being cut then increased again.
Labour’s list also counts a number of freezes to tax thresholds as rises in tax, but this appears uncontroversial.
The Institute for Fiscal Studies (IFS) points to freezes in “various income tax and National Insurance thresholds” as “tax-raising measures”. According to Stuart Adam, a senior economist at the IFS, it is “entirely fair to count threshold freezes (whether income tax or inheritance tax) as tax rises, and the government itself does so”.
The process by which additional tax is raised due to frozen thresholds is known as ‘fiscal drag’. As the House of Commons Library notes, it “increases people’s taxable income without nominal tax rates actually increasing”, and provides the government with additional revenue from taxation as rising salaries mean more people move into higher tax brackets.
Some tax rises appear to be missing
While we don’t know how Labour decided what to include on the list, arguably there are other tax measures since 2019 that had a revenue-raising effect that could have been added.
Possible examples include the energy profits levy (windfall tax), the rise in National Insurance that was implemented between April 2022 and November 2022, the climate change levy and the plastic packaging tax.
Some tax rises which have been announced but not yet implemented, such as the increase in the Annual Tax on Enveloped Dwellings, are also not on the list.
Counting tax rises ‘pretty meaningless’
The IFS told us that ultimately the Labour analysis is likely to have missed a large number of specific tax rises.
Mr Adam said: “If you simply add up the number of tax reforms announced since 2019 with a positive revenue yield, there are literally hundreds. On the same basis, there have also been hundreds of tax cuts.”
The Office for Budget Responsibility’s Policy Measures Database includes lists of tax changes announced by the government at fiscal events—the Budgets and Spring or Autumn Statements.
Mr Adam added: “Fundamentally, counting the number of tax rises isn’t very interesting or meaningful. It doesn’t take into account whether they’re big or small, or anything else. It’s not even obvious what would count as a single tax rise—for example, if the government increases the tax on beer, cider, wine and spirits, is that one rise in alcohol duties or four separate tax rises?
“It’s pretty arbitrary how you count them, and it's pretty meaningless anyway if you're just counting each tax rise regardless whether it's a £5 million tax rise or a £50 billion tax rise. What matters is which of those is happening, much more than it matters whether you've got one £5 million tax rise or two £2.5 million tax rises.”
Mr Adam said it is for this reason that IFS publications “tend to focus on other measures, such as the total net tax rise”. The IFS has said that the current parliament is “the biggest tax-raising parliament in modern times” even after a cut in National Insurance was announced at the last Autumn Statement.
Image courtesy of stevepb.