Chancellor Rishi Sunak will have almost £40bn more in the coffers over the next four years due to inflation pushing up VAT receipts, the Lib Dems have calculated (Kirsty O’Connor/PA)
(Picture: PA Wire)The cost of living crisis is taking a toll on every corner of Britain. North and south, rural and urban, young and old. But new analysis by the Standard reveals that Londoners are twice as likely to be made worse off by today’s National Insurance rise than those in the rest of the country.
That is the combined effect of the 1.25 percentage point rise to NICs and the raising of the threshold by £3,000 from July, which means that £34,000 per year becomes the point at which people start to pay more. Coincidentally, that was the median London salary last year.
This is not an argument against a progressive taxation system. It is absolutely right that those with the broadest shoulders carry the heaviest burden. Yet changes like these, which disproportionately hit London, are further evidence of Boris Johnson and Rishi Sunak’s apparent comfort with levelling down our city.
Because the cost of living is greater in the capital than anywhere else. What might be considered a decent salary in one part of the country gets swallowed up by rent alone in the capital.
Other changes in the spring statement were clearly not directed at our city. Take the 5p cut to fuel duty, which will only help the little over half of London households who own a car, compared with a national average of 80 per cent. Meanwhile, the increase in VAT on the hospitality businesses will have a disproportionate impact on the city’s massive restaurant and hotel sector.
The capital already contributes vastly more in tax than it receives back from the Treasury. Now, these tax hikes hit struggling Londoners and restrict the ability of the capital to lead the recovery. Further evidence that the Chancellor’s statement was misguided and a missed opportunity.
