Ending austerity ‘to add 1p to VAT and tax’

PHILIP Hammond will have to increase income tax, National Insurance and VAT by the equivalent of one penny in the pound to meet Theresa May’s pledge to end austerity while sticking to his plan to eliminate the deficit, say researchers.

The Institute for Fiscal Studies (IFS) warned that the £19billion needed in rises would take Britain’s tax burden to its highest level since the Second World War.

In her party conference speech, the Prime Minister said that people need to know austerity is coming to an end.

But the IFS states in its Green Budget: ‘Unless there are substantial tax rises, or much-better-than-expected economic growth, the Prime Minister’s aim of “ending austerity” is unlikely to be compatible with the Chancellor’s aim of balancing the books by the mid-2020s.’

The economic think-tank said a £19billion tax increase is equivalent to raising tax by 1 per cent of the British economy.