Tax promises have unsurprisingly been a key part of the election campaigns, with both Labour and the Conservatives delivering pledges not to increase VAT should they be in power following the vote on 8th June. With Theresa May currently on course to remain Prime Minister and increase her parliamentary majority, the attention of many has turned to her lack of commitment to what will happen with other taxes such as income tax and National Insurance.
It was only last month that Chancellor Philip Hammond had to reverse plans to increase national insurance payments made by self-employed workers, a u-turn significantly influenced by the fact that such a move would break a commitment made in the party’s manifesto. However, since the snap election announcement, the Prime Minister has remained non-committal on retaining the ‘tax lock’ introduced by her predecessor, David Cameron, which prevented any rises in VAT, income tax and national insurance.
Speaking to Andrew Marr on his BBC show in April, Theresa May chose her words carefully: “We have absolutely no plans to increase the level of tax but I’m also very clear that we don’t want to make specific proposals on taxes unless I’m absolutely sure that I can deliver on those.” During her appearance on the Peston On Sunday programme on ITV, the message was similar, telling the journalist: “We have no plans to raise the level of tax. In relation to specific taxes, we won’t be increasing VAT.” Robert Peston took the opportunity to challenge Theresa May on her stated aim to prioritise the interests of the so-called Jams – those who are “just about managing” – if she was unable to guarantee the future of the tax lock.
It is equivocation such as this which has sparked the strong feeling that, should the Conservatives remain in power, both income tax and national insurance could be set to rise later this year. Of course, until the Conservative manifesto is unveiled there’s no way of knowing exactly what the party’s taxation plans will be, so expect further scrutiny once the party makes its commitments clear in the days and weeks ahead.