UK Budget 2023: Record $52 Billion Tax Increase

• Historic High: The UK government’s recent budget has introduced the largest tax increase in over 30 years, with new measures expected to bring in nearly $52 billion in revenue by 2028. This includes a series of threshold freezes on income and other taxes, a policy known as "fiscal drag," where inflation and wage growth push earners into higher tax brackets.

• Impact on Public Services: This increase, primarily attributed to unchanged tax thresholds amid rising wages, is designed to address the fiscal impacts of both the COVID-19 pandemic and ongoing inflation. The government is leveraging this approach to reduce public debt and support national services while seeking a balance between fiscal responsibility and taxpayer burden.

• Taxpayer Effects: The policy impacts millions across various income levels, with a forecast that approximately four million people will enter the tax system for the first time. The decision to freeze thresholds rather than raise rates is intended to generate revenue more subtly than direct tax hikes, though it significantly affects middle-income households​