The general election fight has begun and, for better or worse, there are another five weeks left for the two big political parties to convince us that they are worthy of our vote.
‘God, help us, get us out of here,’ I hear some of you cry.
Early signs suggest that we are in for some big surprises in the left camp as Labor and the Conservatives (in particular) compete for our attention.
So far, Rishi Sunak has pulled the biggest rabbits out of the hat. Last weekend he said the Conservatives would introduce compulsory National Service for 18-year-olds if they won the July 4 election.
Sir Keir Starmer and Rishi Sunak are fighting as we approach the general election
Sunak then followed this with a £2.4bn plan to protect state pensions from tax. This would be achieved by ensuring that pensioners’ personal allowances would always be higher than the level of the new state pension.
Baroness Ros Altmann, an advocate for older people, said she was “delighted” with the move.
Between now and July 4, many plans will be announced, as Sunak tries to convince the nation that the Conservatives are worthy of governing for another five years. After all, it is Sunak who must do everything he can to reduce Labour’s huge lead in the polls.
While it must go on the offensive, the Labor Party is likely to remain silent. His approach so far is not to do or say anything that would allow the Conservatives to claim that he is little different from the free-spending, wealth-hating Corbyn-led Labor Party, which he pulverized in the 2019 election.
In recent days, Sir Keir Starmer’s financial lieutenant, Rachel Reeves, has gone to great lengths to appease middle-class voters.
Writing in the Daily Mail, he said: ‘My first step in government will be to deliver economic stability with tough spending rules so we can grow our economy and keep taxes, inflation and mortgages as low as possible. I don’t believe you can tax and spend to achieve growth, and I didn’t come into politics to raise taxes on workers.’
Twenty-four hours later, he confirmed that neither income tax nor National Insurance rates would rise if Labor won the election. Hip Hip Hooray.
Rachel Reeves, Sir Keir Starmer’s finance lieutenant (pictured in front of the Bank of England), has done everything she can to appease middle-class voters.
Tony Blair pictured after the 1997 election, when Labor failed to tell the electorate that the first key policy it would implement if it came to power was a £5bn annual tax raid on company pension schemes .
Of course, we will learn more about the intentions of Labor and the Conservatives when they publish their manifestos early next month. I imagine the Conservative manifesto will be bold and politically engaging (nothing to lose), while Labour’s will be as dull as a ditch (nothing to gain by giving away too much).
Of the two, the conservatives’ direction of travel is easier to discern. In terms of taxes, he has already promised to continue reducing National Insurance rates, rather than simply stating (as the Labor Party has done) that they will not rise again.
And, depending on the economy continuing its upward trajectory, I’m sure he will commit to unfreezing income tax thresholds for everyone, not just the elderly. Too many working people have been forced to pay higher income taxes.
As we stand, the current thresholds are set in stone until 2028. The Conservatives, who introduced them in the wake of the pandemic and lockdown, must commit to removing them as soon as possible.
It is an issue that many Daily Mail readers are vehemently passionate about. Failure to act would be a huge waste of votes.
The Conservative manifesto is also likely to promise cuts to both stamp duty on home purchases and inheritance tax, policies that might well have already been implemented were it not for the financial disaster left behind by Liz Truss’s brief reign as First minister.
As for state pension payments, the Conservatives have already promised to maintain the triple lock if they win the election, thus ensuring that pensions rise by a higher proportion of inflation, average income growth or 2.5 percent. hundred.
For the Labor Party, it will be what is not said in its manifesto that will be of greatest interest. Aside from Reeves’ reassuring comments at the weekend about income tax and National Insurance, we know that Labor wants to impose a 20 per cent VAT on school fees. He also wants to ensure that non-dominants pay their fair share of taxes, while hitting oil and gas producers with an “adequate” windfall tax.
Like the conservatives, he has also committed to maintaining the triple lockdown. However, he has so far not commented on whether he intends to widen the National Insurance net to include pensioners receiving state pensions.
Sir Edward Troup, Reeves’ tax tsar, has previously said it is a “complete disgrace” that pensioners do not pay National Insurance (indeed, he also said it was “ridiculous” that they receive free TV licences). Maybe he’s badgering Reeves about these issues right now.
The Labor Party has a history when it comes to omitting vital policies from its manifestos.
In 1997, Labor did not tell the electorate that the first key policy it would implement if it came to power was a £5bn annual tax raid on company pension schemes.
He duly won, launched the tax raid (removing the tax relief British companies enjoyed on dividends paid into their pension plans) and stood by while luxury company pension plans (so-called defined benefit plans) they withered.
In some cases, this tax raid was ultimately responsible for tens of thousands of workers losing a large portion of their promised pension when their employers went bankrupt in the early 2000s, leaving in place a company pension plan with insufficient assets to meet all its commitments. to the workers.
Until now, like the New Labor dream team formed by Blair and Brown in 1997, Starmer and Reeves have said little about wealth-related taxes. This suggests that an attack on our pensions and wealth could well be just around the corner.
There are several wealth-raiding weapons Reeves could employ to fund his party’s spending plans (including 1.5 million new homes and the creation of state-owned Great British Energy, a green energy provider).
Jeremy Hunt removed this lifetime allowance (set at £1,073,100) but Reeves has already said he will bring it back.
It could reintroduce the limit on the amount rich people can save within a pension fund without incurring additional tax charges. Chancellor of the Exchequer Jeremy Hunt scrapped this lifetime allowance (set at £1,073,100), but Reeves has already said he will bring it back.
It could reform the tax relief that workers enjoy on contributions they make to their pension funds so that the percentage rate is the same for everyone, regardless of whether they are basic or higher rate taxpayers. Currently, the system favors higher earners, something I’m sure irritates Reeves.
It could also raise the taxes investors pay on stock gains and dividend payments to bring them in line with income tax rates. On dividends, for example, a basic rate taxpayer currently pays tax of just 8.75 per cent on income above the annual tax-free dividend allowance of £500, while a taxpayer with a higher rate pays 33.75 percent. These could be increased to 20 percent and 40 percent, respectively.
Most controversially, it could restrict the amount savers and investors can deposit into Individual Savings Accounts (ISAs) tax-free. Currently, the annual limit for adults is £20,000.
Everything to think about as we approach the 4th of July.
- What issues affecting your finances would you like the two major parties to prioritize in their manifestos? Email jeff.prestridge@dailymail.co.uk
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