Quess who will be paying and no it’s not the rich.
By Sean O’Grady, Economics Editor
Thursday, 31 January 2008
A devastating verdict on the public finances was delivered yesterday by the respected Institute for Fiscal Studies (IFS). In its latest “Green Budget”, the IFS argues that the Chancellor, Alistair Darling, would need to announce fresh tax increases amounting to about £8bn in this year’s spring Budget to keep public sector debt below the Government’s self-imposed ceiling, and to bring about the improvement in the public finances over the next five years that the Treasury predicts.
Without tax rises, the IFS said, “we expect the Government to have to borrow more than £40bn this year, next year and in 2009-10. We expect public sector net debt to hit the Government’s ceiling of 40 per cent of national income in 2009-10 and to rise to 41.2 per cent by 2012-13. The Government would also break its ‘golden rule’ [to borrow only to pay for investment] over the new economic cycle”. The IFS suggests the tax burden will rise to a quarter-century high by 2011-12.