By Tony Winterburn • 03 February 2021 • 22:20
Brits Told To Brace For ‘Huge Tax Rises To Pay For Covid Spending’.
BRITS are set to be slapped with ‘huge tax rises’ to pay for the Covid-shaped hole in the accounts, a top economist has warned. Head of the Institute for Fiscal Studies, Paul Johnson, said that the economy will be smaller for years to come but public spending will carry on growing regardless.
He said Chancellor Rishi Sunak will have to jack-up taxes to plug the shortfall and pay for the ballooning health and social care budgets. However, the PM said he does not expect big tax rises in next month’s Budget, but rather later on in the year.
Boris Johnson told the Treasury Committee: “I think it is pretty unlikely that taxes won’t rise as a fraction of national income. There are three reasons for that. One is that probably the economy will be smaller in three or four years’ time than it would have been without the pandemic having occurred. That will mean less tax revenue and at least the same level of spending demand. Secondly, I think there will actually be a higher level of spending demand. It seems to me unlikely that we will accept the same level of spending on health, education and social care as it looked like we would before.”
Britain’s public debt has passed £2 trillion pounds (€2.277 trillion), pushed up by emergency spending on Sunak’s coronavirus job retention scheme, tax cuts for businesses and consumers and even a dining-out subsidy to coax people back into restaurants.
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