© Reuters Budget: Pressure on Hunt to remove pensions 'stealth tax' and VAT 'tourism tax'
Proactive Investors – Ahead of the , the government is said to be mulling the potential withdrawal of several policies that have been unpopular or failed to work as intended, potentially including tweaking a ‘stealth tax’ on pensions.
Chancellor of the Exchequer Jeremy Hunt has also ordered an Office for Budget Responsibility review of whether to bring back VAT-free shopping.
The result, which will assess the impact of the ‘tourist tax’ introduced in 2020 on tourist numbers and spending patterns, will be confirmed alongside the Spring Budget, the Financial Times reported.
Removing VAT-free shopping for international visitors has put the UK at a competitive tourism disadvantage against other countries, but a U-turn is reported to potentially cost around £2 billion.
There were also reports over the weekend that support for heat pumps and an associated ‘boiler tax’ would be withdrawn or watered down.
The stealth tax on pensions was created by Prime Minister Rishi Sunak’s freeze on tax thresholds, which will force many retirees claiming a married couple’s tax break to pay a levy on their state pensions for the first time.
As this could affect up to 900,000 pensioners, according to the Telegraph, two former pensions ministers have urged Hunt to do more to protect this group in an election year.
The effects of this tax on pensioners highlight tensions within fiscal policies aimed at generating revenue while maintaining public and business support.
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