US EditionUK needs big tax rises to avoid second Liz Truss episode, think-tank says
Niesr warns a 2p basic income tax rise could raise £20 billion to address a £50 billion public finance gap and avoid unsustainable debt, urging credible fiscal measures.
- Ahead of the November 26 Budget, Niesr advised Rachel Reeves to raise the 20% basic rate by 2p, expected to raise around £20 billion, as she is on track to miss a £38.2 billion fiscal rule in 2029-30.
- Analysis shows a £60 billion shortfall indicates the need for at least £30 billion of headroom, according to Niesr, to support the fiscal gap faced by Rachel Reeves.
- Under Niesr's plan, a 5p increase on the 40% higher rate would raise £10 billion, and a similar hike on the 45p band would add £500 million, affecting over 7 million earners and more than 39 million basic-rate payers.
- The think-tank cautioned that alternatives like VAT hikes would push up inflation, and market reaction could resemble a 'Liz Truss moment,' according to Niesr.
- Ms Reeves had pledged not to raise taxes for working people but has refused to rule out hikes and previously raised employers' national insurance contributions amid high UK debt and elevated borrowing costs.
28 Articles
28 Articles
Telegraph & Argus
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