While Jeremy Hunt made much in his speech of the Conservative Party’s commitment to cutting taxes, the overall picture remains that taxes are set to rise to a post-war high as a result of decisions made by Conservative chancellors over the past 14 years.

Looking at this budget in isolation, it was one in which Hunt announced numerous tax rises (including reforming tax treatment of non-doms, a new tax on vaping products and extending the energy profits levy), many of which will raise a highly uncertain amount of money, to help fund some significant, headline grabbing tax cuts (such as cuts to national insurance contributions or NICs, fuel duty and reforming the high-income child benefit charge) – the revenue costs of which are far more certain.  

This budget showcased some common poor practices in tax policy making: most obviously announcing major tax changes without a proper policy development process, including open consultation. The reforms of the non-dom tax regime are something that mere months ago the Treasury was savaging in anonymous media briefings.1 There were some positive developments in that the Treasury did provide a reasonably clear description of what the non-dom reforms are aiming to achieve. But, given the importance of using good evidence in tax policy making, it was frustrating that the documents published by both the Treasury and the OBR are vague about what evidence they have used to cost this policy, even though this is an area that has been examined in detail by external researchers.

One ray of light, in terms of improving the structure of the UK tax system, was that Hunt chose to again focus tax cuts on NICs rather than income tax. This helps to reduce the discrepancy between how earned and unearned income is taxed. However, the public would be better served if the government set out a clear strategy for long-term tax reform, rather than constant tinkering as a result of last-minute political horse-trading.

In a move that will have surprised nobody, Hunt’s other big tax cut was the announcement that fuel duties will be frozen for another year. This will cost of £3bn in 2024/25 but just £800m a year thereafter because – he claimed with a straight face – fuel duties will rise by 5p a litre next March and then be indexed to price growth thereafter. In reality, no chancellor has increased fuel duties at all since January 2011. If the government failed to follow through with future rises, it would have even less headroom against its target to get debt falling in five years’ time: the OBR estimates that about half its £8.9bn headroom would be wiped out under that scenario.