Tax burden set to rise to 80-year high by 2028-29

Embargoed: 00:01, Monday 6th May 2024

 

  • Tax burden set to reach 80-year high of 37.1 per cent in 2028-29

  • Current parliament will be biggest tax raising parliament since 1950

  • TaxPayers’ Alliance calling for tax cuts to change trajectory of ever growing tax burden

Analysis by the TaxPayers’ Alliance of new Office of Budget Responsibility (OBR) figures has found that the tax burden has fallen for the first time in this parliament, but is forecast to rise to an 80-year high by 2028-29

As a percentage of GDP, the tax burden fell from 36.3 per cent in 2022-23 to 36 per cent in 2023-24, having increased from 33.1 per cent in 2019-20. But with the tax burden expected to increase again to 36.5 per cent in 2024-25, a total increase of 3.3 percentage points (due to rounding) since 2019-20, this will be the biggest tax-raising parliament since 1950.

Research by the TPA has previously found that governments which raise the tax burden typically lose elections, while those which lower the tax burden typically win elections.

Government spending is set to fall to 42.5 per cent at the end of the decade, the lowest level since 2019-20, but still higher than any pre-pandemic year between 2013-14 and 2019-20.

The TPA is calling on the government to ensure that the fall in the tax burden over the latest financial year isn’t an anomaly and that the current trajectory towards an 80-year high burden is changed.

 

READ THE BRIEFING NOTE HERE

 

Key findings:

  • In 2023-24, the tax burden as a percentage of GDP fell by 0.3 percentage points from the 2022-23 figure to 36 per cent. This is the first time the tax burden has fallen as a percentage of GDP since 2019-20 when it fell by 0.7 percentage points from the 2018-19 figure to 33.1 per cent.

  • The tax burden is forecasted to rise every year from 2024-25 up to the end of the forecast period in 2028-29. The forecast shows the tax burden standing at 37.1 per cent in 2028-29, this would be the highest tax burden in 80 years.

  • The forecasted tax burden for 2028-29 means that only the tax burden in 1948, of 37.2 per cent, would surpass it. 

  • The current parliament is set to have increased the tax burden by more than any other single parliament since 1950 as a percentage of GDP, raising it by a forecasted 3.3 percentage points. The next largest increase in the tax burden by a parliament occurred after Harold Wilson’s second general election victory with the 1966 to 1970 parliament increasing the tax burden by 3.0 percentage points.

  • The 1951 to 1955 parliament cut the tax burden by the largest amount as a percentage of GDP with it falling by 5.1 percentage points.

  • Total managed expenditure, the sum of public sector expenditure, net investment and depreciation, reached its post-war peak during the coronavirus pandemic. As a percentage of GDP, it accounted for 53.1 per cent in 2020-21. This is set to consistently fall until it reaches 42.5 per cent of GDP in 2028-29, the end of the forecast period.

  • By 2028-29, total managed expenditure as a percentage of GDP is forecast to be equivalent or more than every pre-pandemic year between 2013-14 and 2019-20, with it standing at 44.1 per cent in 2012-13.

 

READ THE BRIEFING NOTE HERE

 

 

John O’Connell, chief executive of the TaxPayers' Alliance, said:

"The economy is set to hit yet another grim record by the end of the decade, even if the projected fall in spending represents a glimmer of hope.

“An 80-year high tax burden will mean more misery for hard-pressed taxpayers and businesses, suffocating the economy for many years to come if action is not taken.

“Ministers need to ensure the recent fall isn’t simply a one-off by bringing in a serious package of tax cuts and simplification”

 

TPA spokespeople are available for live and pre-recorded broadcast interviews via 07795 084 113 (no texts)

 


Media contact:

Elliot Keck
Head of Campaigns, TaxPayers' Alliance
[email protected]
24-hour media hotline: 07795 084 113 (no texts)

 

Notes to editors:

  1. 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.

  2. TaxPayers' Alliance's advisory council.

  3. The TPA has been regularly producing research and briefings on the rising tax burden.

 

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