Yesterday I reported that unemployment was rising under Labour. Today, it’s the turn of income taxes. Hard working taxpayers are being squeezed as never before.
Taxes on average incomes are at their highest since records began in 1987. The Office of National Statistics reports that taxes on incomes are now 23.6 per cent of wages and salaries.
This must be borne in perspective; taxes on average incomes have hovered between 20 and 23 per cent throughout the two decades in which they have been measured. But taxes are creeping up, with no sign now that in the near future they will be reigned in.
The squeeze is especially painful for two reasons. Firstly, it is outpacing rises in wages: taxes rose by 6.7% compared to wage rises of 4.6%. Secondly, this comes as other inescapable costs are also rising: interest rates are rising; inflation is rising; utility bills are rising. Consumers are under intense strain. This year’s Christmas cheer is increasingly being funded by savings rather than income, which can only be a short-term solution.
2007 is likely to be a very happy new year for Gordon Brown as he finally realises his lifetime ambition and moves into Number 10. In doing so, he will leave behind a Treasury in a parlous state. Whomever he makes his Chancellor (and my bet is on Alistair Darling) will inherit a poisoned chalice; inflation, unemployment and taxes are all rising as Brown’s public sector profligacy bites home. A happy new year for Mr. Brown, perhaps, but for the rest of us, the long hangover is coming.