Johnson’s £12 billion tax gambling: big power conservatism or expedient?


Boris Johnson hosted a group therapy meeting for his lost Conservative Party on Wednesday night. “We are a free enterprise, the private sector, Low taxes,” The Prime Minister emphasized. Conservative MPs gathered in the boardroom of the House of Commons committee overlooking the Thames and knocked on the table in agreement.

As with Johnson’s political manifesto occasionally, the truth is somewhat different.Less than an hour later, most of the same members of Congress Vote for his plan Increase in taxes of 12 billion pounds a year to solve Health and social health crisis.

This move allowed the UK to set the highest tax burden since 1950, accounting for 35.5% of national income, when the country’s most radical Labour government under the leadership of Clement Attlee was turning part of the economy Nationalize and work hard to deal with the aftermath of the Second World War.

Many conservatives still consider themselves Small states, low-tax politicians Walk on the sacred steps of former leader Margaret Thatcher. However, the reality is that after 11 years of the Conservative government, graduates who repay their student loans and pay the minimum income tax rate in the UK face a loss of 50% of the wage increase of 27,288 or more by the employer.

When Boris Johnson visited the Westport Nursing Home in East London, just a few hours before he proposed a £12 billion tax initiative © Paul Edwards/Pool/AFP via Getty Images

“This is all shit,” a former Conservative Party minister said, and then voted to increase national insurance contributions by 1.25 percentage points — paid by employers and employees — and dividend taxes were also increased.

This move represents a huge change in British politics. “This is a big thing we have done-especially for the Conservative government,” said an ally of the British Chancellor of the Exchequer, Rishi Sunak. The journalist Allister Heath wrote an article in the Daily Telegraph (Johnson’s former employer and conservative bastion) accusing the Prime Minister and his members of Congress of “conspiring to undermine the morality of the Conservative Party.”

Get rid of the clamor of criticism from the Conservative Party, Johnson It is not only correct to calculate tax increases to save national health services, but also The British public will accept it widelyJohnson told colleagues that this policy is not a gamble: “Gambling will not fix the NHS,” he said.

The Conservative Party is always afraid of being portrayed as presiding over failed medical services in elections.

“This shows that they are more interested in winning elections than in lowering taxes,” said Torsten Bell, head of the charitable organization of the Resolution Foundation. Veteran Conservative MP Gary Streeter (Gary Streeter) added: “The genius of the Conservative party is that it can constantly reinvent itself. We exist to solve today’s problems.”

Protesters outside Parliament in central London last weekend called on the government to resolve the NHS waiting list

Protesters outside Parliament in central London last weekend called on the government to resolve the NHS waiting list © Stefan Rousseau/PA

Impossible dream

For a long time, Britain’s problem is that it wants to have European-level public services and American taxation levels. This is impossible, said Paul Johnson, director of the Institute of Finance: “You have to make a choice.”

While keeping a political distance from Europe, the United Kingdom is increasingly choosing economic models in its geographic neighborhoods. British taxation has not yet reached the level of Germany, Italy or France, but it is moving in this direction.

Prime Minister Johnson, who does not have a fixed political residence, worries NHS hospital waiting listIntensified by Covid-19 and reaching 13 million patients, this is a human and political disaster about to unfold under his supervision. He also needs funds to reform the country’s chronically underfunded social care system. If people suffer from dementia or other chronic diseases, they will face catastrophic economic losses.

British graduates will lose almost half of their salary increases due to taxes.The chart shows the total tax wedge (marginal personal income tax and social security contribution rate of total labor income) for graduates in the following countries and the United Kingdom in 2022 in 2020 (%) Japan, Canada, United States, Germany, United Kingdom, France, Italy

His solution was grudgingly accepted by Sunak. It was a huge cash injection that would initially make the money flow mainly to the NHS-once described by former Conservative Prime Minister Nigel Lawson as “the closest thing to religion for the British.” Later, in theory, three years later, some of the money will be transferred to social care.

Sunak insisted that this permanent increase in state activity must be funded by higher taxes rather than borrowing: the country’s debt to GDP ratio is now 100%.

The tax increase broke the promise of the Conservative Party’s manifesto and received fierce criticism before it was officially announced. Thatcher Minister Jacob Bris-Mogg said it was a “time to read my lips.” This was for George ·HW·Bush in 1988 as a recognition of the presidential candidate’s promise of no raise. He was forced to rebate his taxes.

British Chancellor of the Exchequer Rich Sunak arrives at Downing Street
Chancellor of the Exchequer Rishi Sunak had to be convinced that Johnson’s plan to raise taxes to pay for the huge cash injection into health services was the right policy of the Conservative government © Daniel Leal-Olivas/AFP via Getty Images

But in the cabinet meeting room on Tuesday morning, the opposition subsided. Sunak challenged other ministers, asking them to use more borrowings to fund additional expenditures. No one raised this case: fiscal conservatism and the desire to balance the books defeated low-tax conservatism. “The top of the party is the Thatcher faction, not the Reagan faction,” said former Deputy Prime Minister Damian Green, referring to the US President’s tax cuts and spending control policies.

This week’s announcement was made after months of attrition, during which The tension between Sunak and Johnson increased sharply, The Ministry of Finance cut the total cost of the package and insisted on setting a new cap on the lifetime cost of social care paid by any individual at 86,000 pounds—the point in time when the state intervened to provide help—far higher than Johnson wanted.

Until the last minute, the polling agency has relentlessly tested this policy and adjusted it to make it “fairer”, including Higher dividend payment tax As well as working pensioners to refute allegations that it brings an unfair burden to low-income earners and young people. Johnson was told that voters would accept Covid as a good excuse for violating election promises. Some even suggested that the Prime Minister tear up the relevant pages of the party’s 2019 manifesto in his speech in the House of Commons. When it was ready to be released on Tuesday, he was sure he could sell the plan.

The graph shows that an increase in national insurance will significantly increase the income collected from this tax

In fact, he did not deviate from the tax increase plan at the last minute. As many people expected, he would receive strong opposition from newspapers supporting the Conservative Party and right-wing lawmakers. Considering his previous U-turn, some people were surprised. This has prompted some speculation that Johnson is about to enter a more decisive stage of his prime ministerial position.

Allies said Johnson was dissatisfied with the “trolley” nickname given to him by his former adviser, Dominic Cummings, and he wrote that his work often involves trying to prevent Johnson from turning around on policy.

“We are worried that we will lose taxes,” a Treasury official admitted, worrying that Johnson will change his mind at the last minute. In this case, he insisted on his gun. On Monday, Sunak was relieved to attend a Conservative Party reception with Johnson on the terrace of the House of Commons, telling members of Congress: “We owe him his support and loyalty.”

The leader of the Labour Party, Keir Starmer, said that additional spending would not help solve the problem of insufficient funding for the social care system.
The leader of the opposition Labour Party, Keir Starmer, said that additional spending would not help solve the problem of insufficient funding for the social care system © British Parliament Photo / Jessica Taylor / AFP via Getty Images

Johnson’s calculations are partly based on opinion polls, but also based on intuition about policies that he believes can be sold to the public. “He is the best contender in modern times-nothing can touch him,” a cabinet minister said.

Johnson’s decision to add a new “health and social care tax” to his personal payroll was regarded as a “genius” by a Conservative MP. It will be called “Boris Taxation”-it will be like “Boris Bike”, the lawmaker said, referring to the rental cycle introduced by Johnson when he was the mayor of London.

The opposition Labor Party was upset when it saw Johnson increase its spending on the NHS (the creation of the Attlee government) and used the National Insurance Tax to do so as the Labor Party did in 2003, which increased the Conservative MPs’ perception of Johnson’s judgment is correct. The Labor Party ultimately opposed this policy-to the delight of Downing Street-saying it would raise an unspecified “wealth tax.”

A corridor at the Royal Blackburn Teaching Hospital: The pandemic has left as many as 13 million people waiting for non-Covid treatment

A corridor at the Royal Blackburn Teaching Hospital: The pandemic has left as many as 13 million people waiting for non-Covid treatment © Hannah McKay/Pool/AFP via Getty Images

Social Care Jigsaw

However, the problem is yet to come.A sort of YouGov poll A survey conducted for the New York Times after the policy was introduced showed that the public’s view of another tax increase may not be as optimistic as the initial public opinion survey showed. The Conservative Party’s approval rating dropped by 5 percentage points, giving the lead to the Labour Party for the first time since January. Six out of every 10 voters said that Johnson and his party no longer care about keeping tax rates low.

Labour Party leader Keir Starmer said Johnson failed to guarantee that the extra cash would solve the NHS waiting list crisis and reassure families that they would not have to sell houses to fund future social care.

Social care policies paid by most workers clearly benefit most children who wish to inherit expensive family homes, and fear that the Alzheimer’s lottery might undermine these expectations. Cummings wrote on Twitter: “The Conservative Party is letting young people-they can’t afford a house, and their income is average/below average-that has been messed up by the hapless Conservative government for a decade, and they work harder. To work locally to subsidize the elderly and the rich.”

Many Conservative MPs — and the Treasury Department — worry that the “emergency” support for the NHS after the coronavirus will never eventually be transferred to pay for improved social care. Conservative MP Jack Berry said the NHS may be “a bottomless pit.”

A senior Conservative Party strategist said that Health Minister Sajid Javid promised to carry out social care conversion after three years of hospital treatment catching up with funds, but added: “It’s not worth writing on paper.” If voters feel the impact of higher taxes but do not see the promised improvement, this may be a real election issue

The bar chart of tax revenue as a percentage of GDP in 2019 shows that the UK is moving closer to the European tax model

If Johnson and Sunak want to increase spending in the future, they obviously don’t have much room for fiscal maneuver. “This will be the last tax increase,” a Conservative MP said. After adding 25 billion pounds in taxes to his March budget and now an increase of 12 billion pounds, Sunak, who is about to conduct a rigorous review of the entire government’s public expenditures, promised his colleagues that his October budget will be a Gentle things.

“We have to enter a different mentality,” a Treasury official said. “We cannot evaluate every press release about how much we promised to spend.”

For Conservative MPs, this is a confusing time. But Johnson may still have a card in his sleeve. It is expected that in October, independent fiscal regulators will state that the economy may not be sustained by the coronavirus as previously thought.

If this happens, Johnson and Sunak will be sitting on an annual windfall. The Government Research Institute estimates that it may be as high as 25 billion pounds, which can be deployed now or shortly before the general election, which may ease tax pressure. This will at least ease a political party that is uncomfortable with the high-tax, high-spending economy it is helping to build.


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