Britain’s left-wing Prime Minister Sir Keir Starmer has danced around the question of coming tax rises, his past as a high-flying lawyer showing as he stresses that even should he rise taxes, he won’t technically have broken his election-time pledge not to.
Former chief prosecutor, now Prime Minister Sir Keir Starmer spoke of the coming October Budget, when the country’s new left-wing government announces how it will tax and spend money for the coming years, in an interview with state-owned broadcaster the BBC on Tuesday morning. Facing a gentle grilling on tax rises — which his government has repeatedly talked up since taking power — Starmer moved fast to protest his innocence on breaking any election-time promises.
He told the broadcaster: “…we were very clear from the manifesto that we’re not going to raise tax for working people. It wasn’t just the manifesto, we said it repeatedly in the campaign… I’m not going to reveal to you the details of the budget, you know that’s not possible at this stage”.
During the general election campaign Labour made much of its manifesto (party platform) promises not to increase taxes in a bid to assuage the usual fears among the general public about what electing a left-wing government might mean for the country. Among these was a specific promise to not ” increase taxes on working people”, explicitly naming National Insurance, income tax, or sales tax.
But there are many taxes the government draws which chancellor Rachel Reeves could argue are not technically levied on “working people”. Employer’s national insurance contributions, which have been much discussed in Westminster in recent days, are a tax on businesses having employees, which is not taken out of staff pay packets but rather is charged direct to the employer. So in a sense putting up this tax is one with comparatively small political cost for Starmer, as the majority of voters won’t immediately feel the impact in their pockets.
Making the cost of employing people higher will likely have aggregate impacts on the national scale though, and those who will really feel the pinch will be those who lose their jobs or jobseekers who never get offered a job at all because employers find their ‘wage bill’ rising by government decree. In a sense the felt impact of a tax on all is massively concentrated in a smaller number of those on the fringes, whose jobs become uneconomical.
The Conservative Party, the moribund rump of a great political force that took a real beating at this year’s general election have been quick to point out what they call Starmer’s hypocrisy. Laura Trott, a Tory spokesman on treasury matters said this morning that Labour had said years ago that employer’s national insurance contributions is a “tax on workers”. The Guardian notes Reeves had said in Parliament in October 2021 of employer’s tax: “…will make each new recruit more expensive and increase the costs to business.
“The decision to saddle employers and workers with the jobs tax takes money out of people’s pockets when our economic recovery is not yet established or secure and only adds to the pressure on businesses after a testing year and a half. When all other costs are going up—the costs of energy and of supplies—these tax rises are only hitting them harder.”
Whether the Tories are factually correct on calling out Labour’s apparent sleight of hand or not, it is somewhat hypocritical nevertheless given the party’s own appalling record on raising taxes while in power.