Hunt’s planned stealth tax raids are especially painful at a time of rising inflation. The £12,570 that an employee takes home tax-free today is worth significantly less now in real terms than it was a year ago, given prices are rising by more than 10pc.
As pay rises accelerate to try and keep pace with inflation, the Treasury could reap a total of £27bn from a range of stealth taxes, at a cost of £1,000 to the average family, the CEBR has calculated. This process is known as fiscal drag, whereby rising wages drag more people into higher tax brackets or taxes altogether.