The public may have reached its limit for tax rises

The UK tax burden is now at a 70-year high. And, while there may be some reason to hold off on cuts right now, taxes are too high because the state tries to do too much. Perhaps it should do less, says Merryn Somerset Webb.

Rishi Sunak
We’re ready to pay a bit less tax, Rishi
(Image credit: © PA Images / Alamy)

Rishi Sunak says that if he becomes prime minister he will cut taxes as soon as he “has gripped” inflation. That would be nice. Over the past 12 years of Conservative government, middle- and high-income-earning households have become “significantly worse off”, says The Times. In 2010, tax freedom day (the day when you have earned enough to pay all your taxes) came on 30 May. This year it came on 8 June. You can thank the government for nine extra days working for the state (with, as far as I can see, no obvious improvement in the public services the state provides in return).

This is mostly about fiscal drag: if the threshold for paying the 40% rate of tax had risen in line with inflation since 2010, it would now be well over £58,000. The fact that it hasn’t will have cost those who pay it (an extra three million of them since 2010) £1,653 each. The threshold at which you lose your personal income tax allowance is currently £100,000. If it had gone up with inflation it would be just over £130,000. That bit of drag costs those who pay it more than £6,000.

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.