The election campaign is now in full swing and the parties have started setting out their stalls. So far, the Conservatives and Labour have both ruled out increases to VAT, income tax and national insurance (more on that later) but no proposals to get a grip on spending, The question that then needs to be asked is: “What will they look to tax next?”
One proposal doing the rounds, particularly among lefty think tanks and policy wonks, is to go after savings, specifically ISAs. The Resolution Foundation, until recently headed up by Torsten Bell (now a Labour parliamentary candidate), have repeatedly called for the level of savings in tax-free individual savings accounts to be capped.
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As ever, the TPA wonks are ahead of the game. Having crunched the numbers, our team have revealed that capping tax-free savings at £100,000 could mean someone who saves the maximum amount in a stocks and shares ISA each year for 20 years would be left with a whopping £138,349 tax bill. Squirrelling away the full annual allowance is obviously not possible for a lot of people, but even someone who saves £5,000 a year would still be hit with a tax bill of nearly £35,000!
Why does this matter? Well, first and foremost, it’s an attack on those putting something aside for a rainy day, or looking to buy a home, or wanting a bit more to enjoy the golden years with. Natural instincts and desires that should be applauded not punished, a point hammered home by TPA researcher, Callum McGoldrick, in an op-ed for CapX: “Saving is necessary for financial independence, the key to getting on the housing ladder, and will almost certainly be key to a successful retirement.”
But it also has wider implications for the economy as a whole. Stocks and shares ISAs in particular are a simple way for Brits to invest in the UK. With growth having been sluggish at best over the last few years, we can hardly afford to hamper ourselves further.
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Explaining our findings to GB News in comments that were also picked up by the Daily Express, our head of research, Darwin Friend, said: “With the tax burden already set to reach an 80-year high, Brits will feel ripped off that one of the few tax-free tools they have could be removed.”
If the next government is serious about balancing the books, they should focus on getting a grip on public spending, not dipping even further into the pockets of taxpayers.
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As mentioned earlier, this week saw various tax pledges from both Labour and the Conservatives, with each rubishing the other's claims. We were also treated to (endured?) the first leaders debate on Tuesday which saw Rishi Sunak clash with Keir Starmer over how much they’d both be hiking taxes by, while Nigel Farage made his return to frontline politics and the leadership of Reform UK.
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Making sense of all the tax policy claims is no easy feat. Fortunately, Elliot Keck, our head of campaigns, took to the GB News studio to clear things up. Elliot told viewers “The great irony is that the reason why Labour are going to have these additional resources to spend on their priorities is precisely because of Conservative tax plans.” Check out Elliot’s full interview here.
With manifestos due to start landing next week, we’ll be providing full analysis of the main party proposals, cutting through the rhetoric, and explaining what it all means for taxpayers. Watch this space!
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TaxPayers' Alliance in the news
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MPs pay
With current polls suggesting there could soon be a large number of new MPs, just how much we pay for MPs has come under renewed scrutiny. As well as access to the subsidised bars and restaurants, new members of parliament can look forward a handsome £91,346 salary (and that’s before the generous defined benefit pension scheme they’re entitled to join).
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Naturally, when we were asked what we thought of all this, we were only too happy to give prospective parliamentarians a dose of reality. Our chief executive, John O’Connell, summed it up perfectly in Money Week: “The stark reality is that while MPs have recently received an inflation busting pay rise, struggling households have grappled with frozen thresholds and relentless price rises. Pay should reflect performance. The best way to achieve this is by linking MPs' pay to the country’s economic performance.”
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Overstaffed, underdelivering
Anyone who’s tried calling their local GP will know just how much of a nightmare it can be, desperately waiting on hold for your call to be answered. What you might find surprising to know (as we certainly did) is that receptionists and admin staff now outnumber GPs in 90 per cent of practices. One even has 22 backroom staff to each GP!
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Our media campaign manager, William Yarwood, was less than impressed, telling the Daily Mail: “Taxpayers will be shocked when they realise how many pen pushers are sitting pretty while phone calls remain unanswered. While efficient record keeping is crucial, some practices have gone overboard on hiring idle workers with little to show for it.” Like all public services, GPs should be focussing precious resources on frontline services, not back office bureaucrats!
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Will quangocrats be the real winners of this election?
Immigration is proving to be a hot topic in this election and the prime minister has announced plans to introduce an annual cap on migrants, to be voted on by parliament. In this week’s blog, William digs beneath the headline and reveals that this plan might not be all it’s cracked up to be.
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Far from having elected MPs ministers setting the cap, they would simply be voting on the recommendation of the Migration Advisory Committee (MAC). ‘Who are they?’ I hear you ask. Well, as William explains: “The MAC is simply another taxpayer-funded quango which advocates for policies the British public does not want, while taking responsibility for decisions politicians would rather avoid.” Taking no prisoners, William goes on to slam politicians for abdicating their responsibilities over the last few decades: “Politicians in Britain seem borderline allergic to governing, seeking to delegate decision-making to whatever opaque quango takes their fancy at the earliest opportunity.” Check out Will’s no-holds-barred blog here.
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A TPA investigation has revealed yet more of your money going to outright bat-ty schemes and projects. This week it’s the Arts and Humanities Research Council, an arm of our old friends UK Research and Innovation, who doled out £80,000 for a project called ‘ Dracula returns to Derby’ which aims to ‘ energise and cross-fertilise communities within Derby’ whatever that means.
Fangs for nothing… (sorry)
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Benjamin Elks
Grassroots Development Manager
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