Comment

Sunak’s tax-grabbing legacy was torn up in half an hour – but Kwarteng missed one crucial thing

The Chancellor could – and should – have gone further

In one swift and brutal blow, the new Chancellor Kwasi Kwarteng ripped up his predecessor’s tax-grabbing legacy and heralded a “new era” of (hopefully) growth.

His “mini-budget” wasn’t technically a Budget so the Chancellor wasn’t allowed the customary tipple, yet many on the Left will be needing a stiff drink after a whirlwind of possibly the boldest Tory fiscal announcements in 30 years.

Scrapping caps on banker bonuses, slashing income tax by five percentage points for the country’s highest earners; Mr Kwarteng’s plan was unashamedly pro-prosperity.

He quickly dismantled his predecessor’s legacy – the Health and Social Care levy and corporation tax rise were tossed in the bin. The distant promise to cut income tax by 1p in the £1 was brought forward and will boost pay packets within months. 

The new Chancellor also announced plans to cut benefits for those who do not do enough to get a job, and a crackdown on militant strikers. The new Tory era will punish the workshy and reward hard graft.

Yet Mr Kwarteng could, and should, have gone further to sever the ties to Rishi Sunak’s tax-heavy legacy. The freeze on tax thresholds, a vicious stealth tax in bouts of high inflation, cannot be allowed to continue.

Mr Sunak’s freeze on every threshold from higher-rate income tax, to inheritance and pension saving allowances, is still due to stand until 2025.

The Treasury has quietly scooped up billions of extra taxpayer pounds by keeping these thresholds frozen whilst inflation runs riot.

The "fiscal drag" effect caused by this deep freeze is diminishing the true value of any tax cuts.

If Mr Kwarteng is really on the side of working Britain, he needs to quickly commit to releasing workers from this ever-growing tax burden.