With the Office of National Statistics recording an 8.8% annual rate of inflation on the CPI in July 2022 and with average energy bills likely to be up to 60% higher than last year, it is clear that—even with the recently announced support from Government—Britons are facing a harsh financial winter. Given the onslaught on family finances from so many directions, many voters are turning to the Government to relieve the strain on them by reducing the tax burden.
The latest research conducted by Redfield & Wilton Strategies finds that a majority of Britons think the Government should lower taxes (51%). This latest result represents a 13-point increase from February in the public’s preference for reducing taxation. Meanwhile, a preference for maintaining current tax levels has declined 12 points since February, with a quarter of voters (25%) currently supporting maintaining the current levels, compared to 37% on 2 February.
There is evidence of a generational divide on tax. Support for lowering taxes is highest among younger, working-age voters, with majorities of those aged 18-24 (54%), 25-34 (64%), and 35-44 (55%) in favour.
Voters nearing or beyond retirement age—perhaps due to their lower levels of income or perhaps anxious to ensure their pensions are funded—are far less likely to prefer reducing taxation and more likely to prefer maintaining present tax levels. Compared to the clear majorities in favour of reducing taxation in the younger age brackets, only 43% of those aged 55-64 and 47% of those aged 65+ support lowering taxes.
A plurality of voters (42%) believe that the government not only should lower taxes, but that it is also in a position to do so. Here there is an intriguing gender disparity, with men (48%) 12-points more confident that the government can lower taxes than women (36%). Here, too, there is a conspicuous age divide. While only 38% of 18-24-year-olds surveyed believe the government is in a position to lower taxes, a majority of 59% of those aged 65+ believe the same.
When presented with a list of proposed tax changes—some of which have been suggested during the Conservative leadership campaign—voters are consistently in favour of options which reduce their personal tax burden. Overwhelming majorities support cutting the standard rate of VAT from 20% to 12.5% (74%), cutting fuel duty by 10% (74%), scrapping the planned national insurance increase (62%), and immediately cutting the basic rate of income tax from 20% to 19% (62%).
On corporation tax, a plurality (43%) supports reversing the proposed increase in corporation tax from 19% to 25% (a key campaign pledge of Liz Truss during the Tory leadership campaign), while 34% would support going further than the Prime Minister has so far committed to do by reducing the corporation tax rate from its current 19% to 15%.
The National Insurance increase announced in April by then-Chancellor Rishi Sunak has aroused particular hostility, and Liz Truss made reversing the increase a central theme of her campaign for the conservative leadership. At her first Prime Minister’s Questions, she reaffirmed her intention to reverse the increase.
Yet, despite the overwhelming support for reversing the increase, voters give mixed responses on how much such a step would help them this winter. As many as a quarter of voters (25%) say a reversal will make no difference to their household budgets this winter. Nevertheless, 45% say it would make at least a small difference, and a fifth (20%) say it would make a huge difference.
As we’ve written recently, Liz Truss’s premiership will stand or fall on its ability to help see Britons through what is likely to be one of the most financially painful winters voters have experienced in decades. The perfect storm of stagnating wages, inflation, and a continent-wide energy crisis is seeing household budgets assailed from all sides. As a candidate for the Conservative leadership, Truss marked herself out as a tax-cutter, first-and-foremost. That reputation resonates with the current mood of the public, eager for tax relief to give their personal finances some breathing space.
Truss faces a choice in the months ahead: to pursue her instincts and go ahead with tax cuts or put aside her campaign promises as the public finances come under more serious long-term strain than previously anticipated. And while voters might favour tax cuts now, they also expect the government to fund public services adequately and to intervene directly with assistance if the cost-of-living crisis worsens. A winter of difficult decisions lies ahead for the Government she leads.