£104bn tax bomb

No wonder experts urge Hunt to cut the burden

STEALTH taxes will add more than £ 100 billion to the tax burden by the end of the decade, economists have warned.

Heaping pressure on the Chancellor to lower the burden in next week’s Budget, the Institute for Fiscal Studies (IFS) said revenues are set to rise sharply in the next two years.

It estimated that taxes in 2023-24 will be around £66 billion higher than they would have been had their share of national income remained at its 2018-19 level. By 2028-29, it is forecast to be the equivalent of £104 billion in today’s terms. But any new tax cuts would only ‘partially offset this record-breaking

The Institute for Fiscal Studies has urged the Chancellor to scrap stamp duty in the Budget. It said the cost of the ‘growthfriendly’ reform could be offset by council taxes that reflect current house values. Deputy director Carl Emmerson said a ‘regular revaluation’ process would raise ‘no less than we get from stamp duty and council tax combined’. Abolishing the levy for owner-occupied homes would cost £6billion.

increase’ in tax revenue. The findings prompted fresh calls from MPs for Jeremy Hunt to cut taxes in the Budget.

In today’s Mail, Dame Priti Patel urges the Chancellor to ‘ease the tax burden on families’ by raising thresholds and cutting rates.

Her comments come as the IFS published a report setting out the ‘context’ for the Budget next Wednesday.

It said: ‘In order to meet the financing requirements of a bigger state, revenues are set to rise sharply over the next couple of years. Having already risen from 36.8 per cent of national income just before the pandemic to 40.3 per cent this year, total government revenues are forecast to reach 41.6 per cent of national income in 2028-29 – a total increase of almost 5 percentage points in less than a decade.’

IFS director Paul Johnson said:

‘In the end, a combination of long periods of austerity, the end of the cutting in defence spending, the cost- of-living crisis – all of those things – and demographic change beginning to take hold. It was going to burst out at some point, and I think this parliament will be looked back on as the point at which this burst out.’

The IFS also suggested the budget deficit may be around £11 billion smaller than it was forecast to be in November, but still much higher than it was forecast in March 2022. The IFS urged the Chancellor to resist announcing tax cuts at next week’s Budget unless he can show how he will pay for them.

But last night Sir Jacob ReesMogg, the Conservative former business secretary, told the Mail: ‘The state is too big and both taxes and expenditure need to be cut.

‘ The IFS report is deeply concerning as a further £104 billion will be extracted from taxpayers to fund a bloated, greedy and inefficient state.’

A Treasury source said: ‘After borrowing £400 billion to protect lives and livelihoods throughout a once-in-a-generation pandemic, and a further £100 billion to shield families and businesses from (Vladimir) Putin’s energy shock, we had to take some difficult decisions to help pay down the debt. However with the economy now turning a corner with wages rising, unemployment down and inflation more than halved, we can start to cut taxes in a way that is affordable and responsible.’

The Ministry of Defence will not get extra funding in the Budget despite recent warnings about the poor state of the military, The Daily Telegraph reported.