Boris Johnson is drawing up plans to raise the 40p income tax threshold to £80,000 at a cost of almost £10 billion. The higher rate of income tax currently applies to earnings over £50,000 in England and the move could benefit more than three million people.
The former foreign secretary believes the cost of the policy could be met through some of the cash set aside for no-deal Brexit planning.
In his regular Daily Telegraph column, he said: ‘We should be cutting corporation tax and other business taxes.
‘We should be raising thresholds of income tax so that we help the huge numbers that have been captured in the higher rate by fiscal drag.
‘We can go for much greater economic growth and still be the cleanest, greenest society on earth.’
Under the plans someone earning £60,000 is estimated to see their tax bill fall by £1,000, the newspaper reported. The move will cost an estimated £9.6 billion a year and will be funded from the £26.6 billion of ‘fiscal headroom’ currently set aside by the Treasury for no-deal preparations. It will also be partly offset by increased National Insurance contributions.
However, a source close to French President Emmanuel Macron said yesterday that failing to pay a £39 billion Brexit bill when Britain leaves the European Union would amount to a sovereign debt default.
The source said: ‘Not honoring your payment obligations is a failure of international commitments equivalent to a sovereign debt default, whose consequences are well known.