Martin Lewis challenged Chancellor John Healey on the Martin Lewis Money Show Live, saying frozen tax thresholds are the biggest tax rise in recent history. The money expert cut off Mr Healey mid-sentence as he pressed him on the issue.
The Chancellor appeared on the ITV1 and ITVX show on Thursday night, the day after delivering his first Autumn Budget, which he took over from former Chancellor Rachel Reeves.
Budget changes and the first question
Mr Healey's Budget included a new tax allowance for state pensioners, the abolition of standing charges on gas, and a £100 payment to help with energy bills this winter. However, the tax-free Personal Allowance will be kept at £12,570 in April, the higher 40% band will stay at £50,270, and the highest band will remain at £125,140.
Martin invited the Chancellor onto the show to answer viewer questions following the Budget speech. The first question was about the frozen tax thresholds, which create a tax rise as more households get dragged into paying more tax as wages increase but thresholds stay the same, in what is known as fiscal drag.
Exchange on fiscal drag
Martin Lewis asked the Chancellor: "Forgive me, you said in your speech yesterday 'we are not raising taxes on working people. But this fiscal drag, the freezing of the tax thresholds, is the biggest tax that has ever been raised in recent history.
"Do you accept you are, while you might not be raising tax rates, you are increasing taxes. In truth."
Mr Healey replied: "It is part of any government's revenue and judgements about threshold as well as rates are part of the judgements that have to be taken.
"The plans for the thresholds have been set for the next few years and I took the decision in this Budget that I wouldn't touch those and would do what I can where I could to help people through and make some bigger changes for the long term because fundamentally we've got parts of our system that need fixing."
Martin cuts off the Chancellor
Martin then asked: "Is there any hope that you're going to increase the Personal Allowance in the next few years in future Budgets or is it going to be set in stone until 2031?"
Mr Healey said: "Well we're talking the day after the Budget and - "
Martin then cut him off as he pressed: "We are but there's a lot of anger about this and I understand you don't want to give me future but I think it's worth accepting this is a tax increase. It's not even by stealth, people get it now."
Mr Healey replied: "I accept people feel it. I accept it's something people are concerned about.
"But you ask me about future Budgets and I'm obviously not gonna get into those but what I did do yesterday is confirm people on a full basic state pension that may be caught into the tax threshold would pay no tax at all and that would benefit maybe half a million people."
The Martin Lewis Money Show Live, Thursday October 29 episode is still available to watch on ITVX.
