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More UK spending? Higher taxes look inevitable - think-tank

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More UK spending? Higher taxes look inevitable - think-tank

 

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FILE PHOTO: Britain's Chancellor of the Exchequer Rishi Sunak is seen outside Downing Street in London, Britain, February 14, 2020. REUTERS/Peter Nicholls

 

LONDON (Reuters) - Britain’s new finance minister Rishi Sunak will have to raise taxes rather than rely on tweaks to budget rules if he wants to really ramp up spending in a first post-Brexit budget next month, the Resolution Foundation, a think-tank, said.

 

Sunak is due to announce the tax and spending plans of Prime Minister Boris Johnson’s new government on March 11.

 

His predecessor Sajid Javid unexpectedly quit less than two weeks ago, leading to speculation that Johnson wants to raise spending by more than Javid’s budget rules allow.

 

Johnson plans to help voters in struggling regions who backed him in December’s election by spending more on infrastructure, a big shift for the Conservative Party which has focused on fixing the public finances for the past 10 years.

 

“But new roads and rail lines are only part of the story,” Jack Leslie, a Resolution Foundation economist, said.

 

Johnson has also announced the biggest increase in spending on day-to-day public services in 15 years.

 

“Higher spending will require higher taxes,” Leslie said.

 

Britain’s fiscal forecasters assess each budget against fiscal rules that the finance ministry sets itself. Javid’s rules aim to balance day-to-day spending against tax revenue within three years.

 

The Sunday Times reported that Sunak was considering pushing back that target to five years.

 

The Resolution Foundation said that would create only 15 billion pounds of extra fiscal firepower by the 2024/25 financial year, less margin for error than previous finance ministers have had at a time when spending demands are growing.

 

The Sunday Times also said Javid had been asked to change the rules to allow 1% leeway on balancing the budget.

 

“The big question for (Sunak) is the extent to which he undoes big spending cuts to day-to-day public services, and how that is paid for,” the Resolution Foundation said.

 

Sunak could increase tax revenues by cutting back incentives for private pension contributions, fixing loopholes in inheritance tax and reforming property taxes, it said.

 

There was likely to be some good news for Sunak as he prepared the budget - reduced debt servicing costs from lower interest rates and inflation mean he will pocket a “a modest fiscal windfall” of 8 billion pounds ($10.4 billion) a year by the 2022/23 financial year, the Resolution Foundation said.

 

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-- © Copyright Reuters 2020-02-24
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Sounds like a disaster tax increases.

What a shame.

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5 minutes ago, Chomper Higgot said:

I wonder who they are going to tax?

They will raise VAT. What they will not do is raise the top tax levels.

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20 minutes ago, Rookiescot said:

Yup and its all the fault of the EU and the Remainers.

Oh no wait thats wrong.

Brexiteers. YOU did this.

Are you not in favour of higher taxes and higher Government spending ?

Thats usually  a Labour policy 

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21 minutes ago, Rookiescot said:

 

Brexiteers. YOU did this.

This is the Government , the Conservatives who are in power

Nothing to do with Scottish inde............I mean Brexit  

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2 minutes ago, sanemax said:

This is the Government , the Conservatives who are in power

Nothing to do with Scottish inde............I mean Brexit  

Are you a Brexiteer and did you vote for Johnson?

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Just now, Rookiescot said:

Are you a Brexiteer and did you vote for Johnson?

Yes and Yes (Although I didnt actually vote because my name wasnt on the voting list)

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2 hours ago, Rookiescot said:

Yup and its all the fault of the EU and the Remainers.

Oh no wait thats wrong.

Brexiteers. YOU did this.

As the entire 🇬🇧 left the 🇪🇺 shouldn't that be 'we'?

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