Live Coverage of Prime Minister’s Questions: Keir Starmer Takes on Kemi Badenoch
During the recent Prime Minister’s Questions (PMQs), an intriguing exchange unfolded between Conservative leader Kemi Badenoch and Prime Minister Rishi Sunak regarding tax thresholds. Badenoch referenced remarks made by Chancellor Rachel Reeves during her previous Budget speech.
Key Discussion Points at PMQs
Kemi Badenoch took issue with the apparent inconsistency in maintaining tax thresholds. She highlighted Reeves’ assurance that there would not be an extension of the freeze on income tax and National Insurance thresholds. Badenoch challenged the Prime Minister, asking why freezing thresholds, which was criticized last year, seemed acceptable now.
Understanding the Impact of Freezing Tax Thresholds
Freezing thresholds is generally perceived as a tax increase, primarily due to a phenomenon known as “fiscal drag.” This occurs when rising wages push more individuals into tax brackets, eventually resulting in increased tax revenue without altering individual rates.
- Two Conservative chancellors, Rishi Sunak and Jeremy Hunt, implemented the freeze.
- Current thresholds are set to remain until April 2028.
Labour’s Stance on Taxes
Labour’s 2024 election manifesto claims that the party will not increase taxes for working people. It specifically states that National Insurance and basic, higher, or additional rates of Income Tax, as well as VAT, will remain unchanged. However, it does not address the issue of tax thresholds directly.
Potential Implications for the Future
A continuation of the freeze on tax thresholds would not increase the individual tax rates but would allow more working individuals to contribute higher tax amounts as their incomes rise over time. This strategy could significantly impact taxpayers and public finances.
As debates on the financial future of the country continue, the discussions within the Parliament underscore the complexities and implications of current tax policies.
