Embargoed: 00:01 Thursday 18 February
The TaxPayers’ Alliance (TPA) is calling for a respite from taxes, a rescue for struggling sectors, and a revival for the economy.
The tax rescue package includes £13 billion of savings for hospitality this year, saving our summer holidays by extending VAT and business rate cuts.
- It also proposes linking tax thresholds to inflation or wages, leaving taxpayers on average earnings with an extra £83 in 2022-23.
As Labour leader Sir Keir Starmer delivers his speech on the economy today, the TaxPayers’ Alliance is proposing a tax rescue package to save Britain’s summer holidays.
The research calls for a rescue for struggling sectors forced to close over lockdown, particularly the hospitality industry. Extending the chancellor’s business rates holiday and VAT reduction would create tax cuts of £9.4 billion and £3.5 billion respectively in 2021-22, a total of £12.9 billion. If extended until after 2022-23 as proposed, this would generate total savings of £25.6 billion for the sector over the two years.
Sir Keir Starmer has previously supported these measures, which would be a lifeline for the sector as the UK moves out of lockdown and pubs and restaurants slowly reopen.
This would also have a huge impact on Brits’ staycations, meaning cheaper summer holidays this year. For example, the Adventure Island amusement park in Southend has reduced total prices by 21 per cent, including a 50 per cent reduction in the cost of an annual pass from £100 to £50, due to the tax cutting measures.
The upcoming budget in March will also need to offer a wider economic recovery package. The paper proposes a respite from tax rises, allowing the public to keep more of their own money. By moving the personal allowance in line with wage inflation, taxpayers would save almost £30 in 2021-22 and £83 in 2022-23. Extending the £500,000 stamp duty holiday would also save homebuyers £2.2 billion in 2021-22 and £3.1 billion in 2022-23, encouraging thousands more people to move home.
Table: stealth tax rises by freezing the personal allowance, compared to CPI inflation and average earnings
The TPA also calls for a revival in jobs and investment. This includes scrapping employers’ national insurance contributions, cutting the salary bill for an average company with 50 employees by over £71,000, while raising the annual investment threshold to £5 million, boosting investment across the country with tax savings of £4.3 billion this year and £5.3 billion next year.
CLICK HERE TO READ THE RESEARCH PAPER
1. Respite from tax rises
Without delay, the chancellor must pledge that there will be no tax increases before April 2023 at the earliest. The sooner this pledge is made, the sooner businesses and households can benefit from the stability and certainty it will provide over the next two years.
Crucially, this must include preventing upcoming rises such as the end of the £500,000 stamp duty land tax threshold as well as introducing a new lock on ‘fiscal drag’ – moving tax thresholds up with inflation and earnings – to protect taxpayers from being dragged into higher tax bands during the pandemic. By moving the personal allowance in line with wage inflation, taxpayers would save £29.79 in 2021-22 and £82.76 in 2022-23.
2. Rescue for struggling sectors
At the March budget, the chancellor should offer a rescue package to support those businesses which have been hardest hit by the measures taken to address the virus.
Businesses which have been required to close should be eligible for an exemption from business rates in 2021-22 and 2022-23, saving businesses a total of £18.5 billion.
- The reduced rate of VAT for hospitality, hotels, holiday accommodation and attractions should be extended until 2022-23, saving them £7.1 billion. Alcohol duties should be frozen until 2023.
3. Revival for the economy
The chancellor should announce an economic revival package focused on jobs and investment.
The jobs tax – employer national insurance – should be scrapped and replaced with a temporary payroll levy. This would cut the salary bill for a company with 50 employees by £71,092.
- The factory tax – corporation tax on investment – should be cut, by permanently raising the annual investment allowance from its temporary £1 million limit, due to expire in 2022, to £5 million. This would deliver tax cuts worth £4.3 billion this year and £5.3 billion next year.
CLICK HERE TO READ THE RESEARCH PAPER
John O’Connell, chief executive of the TaxPayers' Alliance, said:
"People from across the political spectrum can see easing the tax burden would decisively help with Britain’s recovery from coronavirus.
“In these difficult times, the chancellor should give hard pressed families and businesses a respite from taxes, offer a rescue to struggling sectors and revive the economy with jobs and investment.
“By doing this, we can get the economy back on track and ready for a new lease of life come this summer.”
Philip Miller MBE, owner of the Adventure Island amusement park in Southend, said:
“After the year we’ve all had in 2020, we wanted to spread magic to more hard working people, who have struggled due to covid.
“We have made our prices even better value, which has been made possible by the reduction of VAT – which we have passed on to our customers.
“It would make a massive difference to the recovery to keep the VAT at 5% permanently so we can continue to deliver great value, and invest in getting the country back up and running.”
TPA spokesmen are available for live and pre-recorded broadcast interviews via 07795 084 113 (no texts)
Media Campaign Manager, TaxPayers' Alliance
24-hour media hotline: 07795 084 113 (no texts)
Notes to editors:
Founded in 2004 by Matthew Elliott and Andrew Allum, the TaxPayers' Alliance (TPA) campaigns to reform taxes and public services, cut waste and speak up for British taxpayers. Find out more at www.taxpayersalliance.com.
TaxPayers' Alliance's advisory council.
The TaxPayers’ Alliance have launched a petition to make the £500,000 stamp duty threshold permanent.
- Sir Keir Starmer asked the prime minister to extend the business rates holiday and VAT reduction during Prime Minister’s Questions on Wednesday 10 February.