Jeremy Hunt today signalled he could look to unfreeze tax thresholds in the future.
The Government has faced intense criticism over its decision to freeze the thresholds at which people start to pay the basic rate and the higher rate, with millions of workers being hit by the effect of “fiscal drag”.
Asked why he did not use the Budget to lift the “stealth” taxes, Mr Hunt told Times Radio: “Well, let’s look at what is going to happen next year to someone on the average income which is about £35,000. The freezing of income tax allowances means that their taxes are going to be £235 higher than they would have been if the thresholds had been increased with inflation. But the National Insurance cuts are going to mean that they pay about £900 less.
“The bigger point you are making, yes, freezing the thresholds is one of the ways in which taxes have gone up in order to pay for the jobs that we protected during Covid, the help we have given families paying their electricity bills over last weekend, all those other very important things.
“And I am not pretending that I have brought all those taxes down in one go. We can’t afford to do that, it wouldn’t be responsible to do that.
“But do I want to carry on bringing them down as I did yesterday, as I did in the Autumn Statement? Yes, I do and I think we have shown the country at two events in a row, stick with the plan, we can bring down taxes in a way that going to help grow the economy, put money in people’s pockets and provide more money for our public services.”
The tax thresholds have been frozen since 2021 and are due to remain so until 2028.