Friday, 30 April 2010

Taxes about to rise sharply

Taxes must rise sharply over the next decade to bring down borrowing, according to the National Institute of Economic and Social Research (NIESR).  In a report, the think tank said taxes would have to rise by the equivalent of 6p on the basic income tax rate to get the budget deficit below 3% by 2020.

It also said the UK economy faces sluggish growth and rising unemployment this year. The BBC's Nils Blythe said that although the large additional tax rises needed to get the budget deficit below 3% by 2020 would not necessarily come in the form of income tax increases, the think tank reasoned that the scale of the rise is equivalent to putting up the basic rate of income tax from 20p to 26p in the pound.

"Only with that type of increase will the national debt eventually fall below the 40% of national income that before the financial crisis was regarded as a prudent level," he said.  The think tank also said cuts to public spending, which will be necessary for cutting the size of the budget deficit, will push growth lower than it otherwise would have been.  

More reality/truth is slowing filtering out ... just not from the Government.