Tax rises are inevitable regardless of who wins the next general election, top economists have warned, as the Government is set to break its borrowing rules by racking up too much debt.
Income tax could have to rise by as much as 3p in the pound if the next Chancellor is to hit his or her borrowing targets.
Both Labour and the Conservatives have promised to stick to the fiscal rules, and analysts at the National Institute of Economic and Social Research (Niesr) warn this means the only way to feasibly meet the promises is to increase taxes.
Niesr said: “Anaemic UK GDP trend growth at about 1pc together with inflation coming back to target means that the winner of the next general election will have to raise taxes to maintain the existing provision of public services.
“There is essentially no fiscal headroom for any further tax cuts, given that the Government’s spending plans do not meet their self-imposed fiscal rules.”
The economists predict the Government will fail to meet its goal to get annual borrowing below 3pc of GDP in five years’ time, and will also not manage to get debt falling as a share of GDP.
Stephen Millard, deputy director at Niesr, said the most obvious way to raise more revenue is through higher income taxes.
He said: “If you want to hit the fiscal target, you need to raise taxes. The most efficient way of doing that is to slap a penny, or two or three, on the rate of income tax.”
He said it would be better to abandon the borrowing rules, replacing the set of targets with something more sensible.
Mr Millard said: “They should change the fiscal framework. It is the targets that are creating the problem, it is the targets that are forcing the Government to put brakes on the economy.”
Read the latest updates below.
https://news.google.com/rss/articles/CBMiaWh0dHBzOi8vd3d3LnRlbGVncmFwaC5jby51ay9idXNpbmVzcy8yMDI0LzA1LzA5L2Z0c2UtMTAwLW1hcmtldHMtbGF0ZXN0LW5ld3MtYmFuay1lbmdsYW5kLWludGVyZXN0LXJhdGVzL9IBAA?oc=5
2024-05-09 09:20:27Z
CBMiaWh0dHBzOi8vd3d3LnRlbGVncmFwaC5jby51ay9idXNpbmVzcy8yMDI0LzA1LzA5L2Z0c2UtMTAwLW1hcmtldHMtbGF0ZXN0LW5ld3MtYmFuay1lbmdsYW5kLWludGVyZXN0LXJhdGVzL9IBAA
Tidak ada komentar:
Posting Komentar