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The average British household will pay more than £1million in tax over their lifetime, new research suggests.
The TaxPayers’ Alliance said paying around £1.1million in tax would mean having to work for 18 years just to pay it off.
It comes as the Prime Minister and the Chancellor were urged to rethink a planned increase in National Insurance set to go ahead in April.
Boris Johnson and Rishi Sunak wrote a joint article to defend the tax hike, arguing it was vital to fund the country’s Covid recovery, despite Conservative MPs calling for it to be delayed or scrapped.
Analysis of official statistics found the poorest households will work 24 years to pay off their tax bill, leaving 16 years of income for themselves.
It found that average households are set to pay almost £180,000 in employer and employee National Insurance contributions over a lifetime, even before the planned rise.
As the Government plans to follow through with the hike in National Insurance this April, new research by the TaxPayers’ Alliance has revealed the average household will pay £1.1m in tax
John O’Connell, chief executive of the TaxPayers’ Alliance, said: ‘With the tax burden at a 70-year high, typical families are now tax millionaires.
‘Taxpayers already toiling half their working lives just to pay off the taxman cannot be asked to endure any further crippling tax hikes. Planned rises, like the national insurance hikes, must be scrapped.’
Even before the planned rise in National Insurance contributions and council tax, the average family would pay almost £180,000 and £80,000 respectively in their lifetime.
This is alongside nearly £480,000 in income tax and £190,000 in VAT. Previous TPA research found the proposed health and social care levy would increase the average worker’s NIC contribution by over £430 every year.
Meanwhile the bottom 20 per cent of households, or families with a household income of £19,171, will work for almost 24 years to pay off their lifetime tax bill, the longest of any group.
The lifetime tax bill for the top 20 per cent of households, or families with an income of £137,669, would be £2,573,815 in direct and indirect taxes, which would take them 19 years to pay off.
The Prime Minister and Rishi Sunak wrote a joint article defending the 1.25 per cent increase in NI, saying it was vital to fund the Covid NHS backlog, as well as fixing the social care system
It comes as Boris Johnson was urged to ‘think again’ after joining the Chancellor and vowing that the national insurance hike will go ahead in April.
The Prime Minister and Rishi Sunak wrote a joint article defending the 1.25 percentage point increase in NI, saying it was vital to fund the Covid NHS backlog, as well as fixing the social care system.
Foreign Secretary Liz Truss admitted that tax rises were ‘never popular’, but said the money needed to be raised.
Senior Tory MPs called on the Prime Minister to reverse his decision because of the looming cost of living crisis.
Robert Halfon, chairman of the education select committee, said: ‘All I can do as an MP, a backbench MP, is just to urge the Government to think again. I hope that the Government make cost of living the No 1 priority.’
He called on ministers to look at different ways to raise the money that the rise is forecast to produce, such as a ‘windfall tax on big business’.
Liz Truss admitted tax rises were ‘never popular’, but said the money needed to be raised
Mr Halfon added: ‘I just want the Government to go back to being the government that was elected in 2019 and put cutting the cost of living first and foremost, and helping struggling families across the country.’
Former Cabinet minister John Redwood told BBC Radio 4’s The Westminster Hour: ‘I’m going to carry on urging the Prime Minister to do the right thing. I want him to succeed.
‘I strongly believe this is a dreadfully bad decision. It’s bad economics, it’s worse politics. It is dangerous for him, for the country, for all of us.’
Mel Stride, chairman of the Treasury committee, agreed, saying: ‘I think this is the wrong decision.
‘Taxes are heading to their highest level since Clement Attlee (in the late 1940s) and we need to be getting them down where the opportunity arises.
‘The recent extra headroom in the borrowing numbers provided this opportunity which would also have helped with cost of living.’
Former housing secretary Robert Jenrick has also called for the tax rise to be delayed, saying 2022 will already be ‘exceptionally hard’ for families.
There had been claims the PM was ‘wobbling’ on the national insurance rise, but in an article for The Sunday Times, he and Mr Sunak defended it.
John Redwood told Radio 4’s The Westminster Hour the hike was a ‘dreadfully bad decision’
The pair described themselves as ‘tax-cutting Conservatives’ and ‘Thatcherites, in the sense that we believe in sound money’.
But they added: ‘We must go ahead with the health and social care levy. It is the right plan.’ They insisted the increase was ‘progressive’ because higher earners pay more, and said: ‘There is no magic money tree.’
Miss Truss said: ‘As soon as possible, we want to be in a position to lower our tax rates, we want to drive economic growth, because ultimately that is what will make our country successful.
‘But we do face a short-term issue, which is that we have spent significant amounts of money dealing with the Covid crisis that does need to be paid back.’
Labour’s levelling up spokesman Lisa Nandy called on ministers to ‘rethink’ the planned rise, adding it would see incomes ‘squeezed even more’.
She said: ‘You can’t possibly hit people with more taxes at the moment. It’s just simply not possible for a lot of people to survive.’
Meanwhile, research showed that the NI hike will clobber firms in the constituencies of Mr Johnson’s Cabinet.
More than 40,500 small firms in the seats of senior ministers face a tax bombshell of £103.6million, the research shows.
Lib Dem leader Ed Davey (pictured) has said the Tories must give firms a chance to grow again after Covid as he accused the Government of ‘clobbering’ them with a ‘crippling’ tax rise
In Chancellor Rishi Sunak’s Richmond constituency in Yorkshire, firms will be blighted by £5.4million worth of extra payments, the research by the House of Commons library found.
Employers in Health Secretary Sajid Javid’s Bromsgrove seat will be the hardest hit out of the Cabinet, with an estimated £6.7million extra tax bill.
In Boris Johnson’s Uxbridge and South Ruislip seat, small firms face £4million in extra tax.
The Liberal Democrats, who commissioned the analysis, accused the Government last night of ‘clobbering’ small firms ‘with this crippling tax rise’.
Party leader Ed Davey MP said: ‘Hard-working people in Boris Johnson’s own backyard are set to be whacked with millions of pounds of extra unfair tax. It is time to spike the hike.
‘The Conservatives’ broken promise is a manifesto betrayal, dropping a tax bombshell on small businesses that are the backbone of our communities, high streets and local economies.
‘We have already lost far too many treasured shops from our high streets, and too many businesses are already drowning in tax rises and red tape.
‘The Conservatives must give entrepreneurs the chance to grow again instead of clobbering them with this crippling tax rise.’
Has Rishi brought Boris to heel… or is Downing St dogfight set to continue?
By Jason Groves
Rishi Sunak was growing increasingly alarmed last week at Boris Johnson’s public wobble over whether to press ahead with the controversial increase in national insurance.
Tory MPs, galvanised by the Daily Mail’s Spike the Hike campaign, were piling pressure on the Prime Minister to reopen what was a done deal to break the party’s manifesto pledge on tax and pour billions more into health and social care.
And Mr Johnson’s resolve appeared to be crumbling. In one interview last week, the PM refused eight times to say whether the tax rise was going ahead.
Tory MPs telling Mr Johnson that ditching the tax would help him stay in office said he was ‘receptive’ to the idea.
The Chancellor planned to tackle the PM directly over the issue at a summit on the cost of living.
But with Mr Johnson tearing up his diary to hold crisis talks with mutinous MPs over the Partygate row, the summit kept being delayed.
Chancellor Rishi Sunak was seen walking his dog with his wife Akshata Murthy near Downing Street in Westminster on Sunday after defending the National Insurance increase
Privately, some Cabinet ministers were willing the rebels on. ‘I hate it,’ said one. ‘I don’t think you’ll find many people lifting a finger to save it if we go down that route.’ In the Treasury, alarm bells were getting louder by the day.
A source acknowledged it was ultimately ‘up to the PM’, but warned that if the tax hike was delayed, it would never be introduced, adding: ‘Then all you’re left with is an unfunded £12 billion spending commitment.’
On Friday, Mr Sunak got his chance to stage an intervention. Treasury sources dismissed suggestions that he threatened to resign.
But in a one-to-one meeting with the PM, he did not mince his words on the political and economic consequences of dropping a plan that was agreed in September after months of negotiations.
Tory MPs telling Johnson ditching the tax would help him stay in office said he was ‘receptive’
The Chancellor said public spending would have to be cut, or other taxes raised, if the hike was spiked.
He also said that, without a long-term income stream in place, the PM would struggle to credibly claim he had met his pledge to ‘fix’ social care.
The truce looks an uneasy one. In their article in The Sunday Times, the two men claim to be ‘tax-cutting Conservatives’ – while backing a huge tax rise. Mr Sunak has succeeded in jolting the PM back into line.
But history suggests that if Mr Johnson finds himself in a tight political spot in the coming days and weeks, the Chancellor may find the battle is not over.
Source: Daily Mail