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Economist criticizes tweet about ‘dubious’ Treasury tax raid
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Economist criticizes tweet about ‘dubious’ Treasury tax raid

The Treasury has been accused of making “dubious” claims about Rachel Reeves’ budget tax raid after declaring it was not raising National Insurance rates.

Paul Johnson, director of the Institute for Fiscal Studies (IFS), hit out at the Treasury after it posted on social media that it “would not increase basic, premium or additional rates of income tax, national insurance or VAT”.

It comes after the Chancellor launched a £16bn National Insurance raid on employers in its first budget last month, which will account for more than half of the Treasury’s planned tax rises.

HM Treasury’s official account on social media site X said yesterday: “Last week we committed to protecting workers in the Budget. “That is why we are not increasing the basic, higher or additional rates of Income Tax, National Insurance or VAT.”

Johnson posted in response: “Really? I know this was in the Red Book. And I’m no expert on rules covering what government departments can and cannot say. But this is doubtful at best. And that is being generous.

“The increase in IN was the central tax increase measure in the Budget. What is the point of pushing this line?

Paul Johnson, director of the Institute for Fiscal StudiesPaul Johnson, director of the Institute for Fiscal Studies

Paul Johnson, director of the Institute for Fiscal Studies, criticized claims made by the Treasury in social media posts – David Rose

Mel Stride, the shadow chancellor and former pensions secretary, said on Friday he had written to the permanent secretary of the Treasury about “the Government’s continued use of misleading claims relating to the increase in National Insurance”.

Stride said on X: “Labour promised not to increase NICs and they did. “They should be honest about it.”

In his letter to James Bowler, the top Treasury official, Stride asked who had signed the Treasury tweet and whether he could confirm that the officials were not “pressured” by the Government to publish misleading information.

Civil service guidelines on social media state that accuracy is a “point of consideration” in posts, Stride added.

The Chancellor announced a record £41.5bn tax increase in her Budget on 30 October, including an extra £25bn from increases in National Insurance Contributions (NICs) made by employers.

This was despite Labour’s key manifesto commitment that “we will not increase National Insurance”.

Ms Reeves has claimed that the increase in employers’ NICs did not compromise Labour’s manifesto promises because it is an increase only in the tax paid by employers and is therefore not a tax “on workers”.

However, Labour’s manifesto did not include any specification that only part of the tax would be protected.

Analysts have warned that the increase in employers’ NICs will be a de facto tax on workers as companies cut pay rises to cover their higher tax bills.

The Office for Budget Responsibility (OBR) warned in its budget analysis that workers would eventually pay four-fifths of the tax increase through lower wages.

Treasury has been contacted for comment.

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