Boris Johnson’s plans for tax cuts would disproportionately benefit the wealthy, according to the Institute of Fiscal Studies (IFS).
Announcing his running for the Conservative Party leadership, the former foreign secretary’s main pledge was to raise the higher rate threshold for tax from £50,000 to £80,000. That plan would benefit just 8% of people in the UK, the IFS has said.
Mr Johnson also said the point at which National Insurance Contributions would be paid would also be raised, a policy more targeted to lower earners, although the new threshold has not been revealed.
During the BBC’s televised debate between five Conservative leadership hopefuls, he said the pledge was an “ambition” rather than a fixed policy.
In its financial assessment of Mr Johnson’s plans, the IFS warned the new threshold for higher rate of tax would cost “many billions”.
Tom Waters, research economist at the IFS, said: “These are expensive pledges to cut tax [which] between them will cost many billions of pounds.
“It is not clear that spending such sums on tax cuts is compatible with both ending austerity in public spending and prudent management of the public finances.”
In total, the move would take 2.5 million people out of the higher rate of tax, costing around £9 billion in income tax receipts.
Although the prime minister hopeful has not responded to the IFS report, he did tell The Telegraph earlier this month that his plans would be partly funded by the government’s no-deal Brexit pot.