General election 2019: Have the Conservatives ‘slashed taxes for the richest’?

Jeremy Corbyn

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Labour leader Jeremy Corbyn has told a rally in Battersea the Conservatives have “slashed taxes for the richest”.

It’s not obvious which taxes he’s referring to and Labour has not yet given more details – but let’s look at a few possibilities.

There are clearly some taxes that have been cut by Conservative chancellors.

George Osborne got rid of the 50p rate of income tax, in 2012, making the top rate 45p in the pound for those earning above £150,000 a year.

He also increased the value of a home people could leave to their children without having to pay inheritance tax.

And later, the level at which people started paying the higher rate of income tax was raised to £50,000.

But looking at these individual tax changes does not give an overall picture of whether taxes have been slashed.

The Office for National Statistics (ONS) publishes figures for the total amount of people’s incomes that goes on direct taxes (such as income tax and council tax) and indirect taxes (such as VAT and tax on petrol).

The ONS reports these figures for the richest 10% of individuals, ranked by their household incomes.

Percentage of income spent on taxes by the richest 10%

If you do that, there has not been a great deal of change since 2010. The proportion increased slightly until 2015 and has decreased somewhat since then, so it’s now very close to where it started.

The Institute for Fiscal Studies answers this question by measuring the impact of tax measures taken, using slightly different assumptions and excluding changes to the economy and the population.

If you look at figure 3.1 in its 2015 election briefing, it tells you measures taken by the coalition government cost the richest 10% about 2.5% of their income.

But the IFS analysis of tax changes since 2015 suggests the richest 10% have now benefited by exactly the same proportion.

Neither the ONS nor the IFS take account of the impact of other taxes such as inheritance tax or corporation tax.

The Treasury also does not take them into account when it conducts such analysis at the time of budgets.

Clearly, the changes to inheritance tax have been better for richer people – but continuous attempts to close tax loopholes have been worse for the rich.

The Conservatives have also cut corporation tax – but there is not a consensus about the impact such cuts have on individuals.

Nor is there reliable analysis looking at richness measured by wealth (how much you own) as opposed to income (how much you earn).

The analysis we have suggests the 10% with the highest incomes did somewhat worse under the coalition and have fared somewhat better since then.

But it would be hard to describe those changes as taxes for the richest being slashed.

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