Existing rules limiting council tax increases would be scrapped, paving the way for authorities to impose double-digit rises. Increasing bills by the current rate of inflation, 10.1 percent, would add £198 to the average Band D bill. The cash wouldn’t go directly to the Treasury but letting councils raise more from local taxpayers would make it possible to freeze or cut the funding provided by central government. Authorities in recent years have been allowed to put up council tax bills by just three percent, including one percent ring-fenced for social care.
It’s one of a series of tough measures under consideration by Mr Hunt and Prime Minister Rishi Sunak, who plan to raise £25 billion from tax increases and £25 billion from spending cuts.
Others include a stealth tax on private pensions so that two million people pay a whopping 55 per cent tax on their pension savings. This would mean extending a freeze introduced last year on the pensions lifetime allowance, which caps the maximum you can save across all company and personal pension schemes without paying punitive tax rates and currently stands at £1,073,100.
Mr Hunt is also considering making electric cars liable for vehicle excise duty in a similar way to petrol and diesel vehicles from 2025-26.
In addition, the Chancellor is looking for ways to raise more money from investors, including increasing taxes charged on dividends by 1.25 percentage points and cutting tax-free allowances for capital gains tax.
In an interview on Saturday Mr Sunak said the Autumn Statement on November 17 would be “compassionate” and “fair”.
He said: “There are difficult decisions to come. We’re going to be fair in how we go about addressing them. People can judge me and the government by my values and our record, and that is that I can manage us through difficult economic times. We always do it compassionately and with fairness at the heart of what we do.”
The Prime Minister said inflation is the “number one enemy” and pledged to do everything he can to “grip” the issue and limit rises in mortgage repayments.
Last week the Bank of England hiked the base interest rate by 0.75 percentage points to 3 percent, and warned the country is facing the longest recession in a century.