The biggest tax heist (that you may not have even noticed)

I

n 1977 two Labour backbench MPs joined forces to rebel against the chancellor, Denis Healey. He had plotted to keep income tax thresholds frozen at a time of rampant inflation in what would be a subtle but sizeable tax raid.

Audrey Wise, the MP for Coventry South West at the time, told parliament: “It is convenient for governments to allow the tax allowances to be eroded, but not convenient for people … it is a rather dishonest system from which we should escape.”

In the end Wise and her colleague Jeffrey Rooker, the MP for Birmingham Perry Barr, won cross-party support and the Rooker-Wise amendment ruled that income tax thresholds should automatically increase in line with inflation.

Nearly 50 years on and politicians desperate to boost Treasury coffers are again guilty of exploiting what is known as fiscal drag to pull off the biggest stealth tax heist yet. Income tax thresholds have been frozen since 2021 and the cost of living has soared more than 20 per cent since then. Millions of workers and pensioners are now paying a higher tax than they would have if the thresholds had kept pace with inflation.