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

 

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.

 

-- © Copyright Reuters 2020-02-24

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19 hours ago, snoop1130 said:

Johnson plans to help voters in struggling regions who backed him in December’s election by spending more on infrastructure,

If its anything like building silly train lines to knock an hour or so from Leeds to London he can forget it

Sounds like a disaster tax increases.

What a shame.

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

Oh no wait thats wrong.

Brexiteers. YOU did this.

I wonder who they are going to tax?

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.

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 

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  

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?

5 minutes ago, sanemax said:

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

Thats usually  a Labour policy 

Higher taxes for the rich yes.

But thats not what the Conservatives will do is it?

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)

1 hour ago, Rookiescot said:

Higher taxes for the rich yes.

But thats not what the Conservatives will do is it?

Yes higher taxes for the rich in particular, but closing tax loopholes, offshore tax avoidance, and taxing Amazon etc profits here (Not in Ireland, Luxembourg etc)  would bring in many many billions. This is something that the Tories will never do as so many of them are stealing from the general public in exactly this way. 

 

Again and again we read that Northern European countries  (Not UK) come top in quality of life, including pensions, and social care just for a start. They value it, and they pay for it.

 

Meanwhile the Dutch prime minister confirms that they are currently talking to over 300 UK firms now planning to move to the Netherlands. Brexit - the gift that keeps on giving!

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'?

1 hour ago, sanemax said:

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

Thats usually  a Labour policy 

It depends on who is getting taxed. Consumption taxes like VAT fall most heavily on the poor and middle class. Given the Tories' predilection for giving tax breaks to the rich, it seems more likely that a rise in VAT will be imposed. But that's just a guess.

Edit: I just noticed NigelGarvie said it a lot better in post #13 above.

Yes it will interesting to see if and how the Conservatives raise taxes.  Their commitment has always been low taxes and pay the workers peanuts.  But we are still in transition and we will be for some considerable time yet.  The bickering over any potential trade deals with the EU is only just starting and that uncertainty will keep the pound low for quite a while yet.

 

Need to sit and watch and see where we end up at the end of the year.

16 hours ago, RichardColeman said:

If its anything like building silly train lines to knock an hour or so from Leeds to London he can forget it

One of the major HS2 contractors is McAlpine a big Tory "donor" (briber).

Also, one of the big bosses of HS2 used to be a big boss of Carillion, remember them!?????

Raise taxes. As long as it doesn't go to the EU. Oh wait! We left the EU! Those taxes will stay in Britain!

13 hours ago, dunroaming said:

Yes it will interesting to see if and how the Conservatives raise taxes.  Their commitment has always been low taxes and pay the workers peanuts.  But we are still in transition and we will be for some considerable time yet.  The bickering over any potential trade deals with the EU is only just starting and that uncertainty will keep the pound low for quite a while yet.

 

Need to sit and watch and see where we end up at the end of the year.

We're probably looking at the next decade with a Tory Gvt, so we best get used to it!

15 hours ago, evadgib said:

As the entire ???????? left the ???????? shouldn't that be 'we'?

You are confusing those who suffer the consequences of an idiot decision for those who made the idiot decision.

 

I suspect this to be a stepping stone on the way to you blaming Remainers for the failings of Brexit.

12 minutes ago, Chomper Higgot said:

You are confusing those who suffer the consequences of an idiot decision for those who made the idiot decision.

 

I suspect this to be a stepping stone on the way to you blaming Remainers for the failings of Brexit.

Labour and its followers need to understand that just by hating the Tories everything will be hunky dory, it won't, Labour need a strategy other than name calling, but that is something that Labour and their remainer supporters are very good at so I don't see any change in the near future.

 

 

7 minutes ago, vogie said:

Labour and its followers need to understand that just by hating the Tories everything will be hunky dory, it won't, Labour need a strategy other than name calling, but that is something that Labour and their remainer supporters are very good at so I don't see any change in the near future.

 

 

What on earth are you rambling on about Vogie?

 

I made no mention of Labour or Tories in my post.

Raising taxes to increase spending on day to day services? Another good move by Boris. If Corbyn did it all the lefty luvvies would be lauding him.

 

Of course, having failed to stop the Democratic will of the people the Remainers have now switched to sniping from the sidelines and wishing ill on Britain. A sad, bitter minority.

19 minutes ago, Chomper Higgot said:

What on earth are you rambling on about Vogie?

 

I made no mention of Labour or Tories in my post.

 

 

51 minutes ago, Chomper Higgot said:

You are confusing those who suffer the consequences of an idiot decision for those who made the idiot decision.

 

I suspect this to be a stepping stone on the way to you blaming Remainers for the failings of Brexit.

You are confusing those who suffer the consequences of an idiot decision for those who made the idiot decision.

You are saying it was an idiot decision, of course that is a minority viewpoint, the majority voted to leave the EU, the Remainers tried to reverse the decision, not compromise but reverse. The Remainers could have easily have walked away with a BRINO, but they misjudged the feeling of the country, who are the idiots now?

"I suspect this to be a stepping stone on the way to you blaming Remainers for the failings of Brexit."

 

The Remainers and Labour have a lot to do with the outcome of Brexit (see the connection now), but we are not blaming you, we are thanking you, we couldn't have done it without you.

2 hours ago, Somtamnication said:

Raise taxes. As long as it doesn't go to the EU. Oh wait! We left the EU! Those taxes will stay in Britain!

Exactly, meanwhile the arguments are starting amongst EU countries on who gets to make up the massive hole left by Brexit. Just wait until Barnier tells them their massive exports to the UK will be on WTO terms next year because of his ridiculous demands!

 

 

4 hours ago, JonnyF said:

Raising taxes to increase spending on day to day services? Another good move by Boris. If Corbyn did it all the lefty luvvies would be lauding him.

 

Of course, having failed to stop the Democratic will of the people the Remainers have now switched to sniping from the sidelines and wishing ill on Britain. A sad, bitter minority.

I suspect most people would wait to see what taxes are raised and what the money is spent on before declaring it a good or bad move.

22 hours ago, rhyddid said:

Hallelujah, hallelujah, hallelujah !!!

We know, Tax Increase its EU fault, but in the next 50 years when Brexiters will clear all the EU mess tax will decrease !

Hallelujah, hallelujah, hallelujah !!!

Actually, no we don't know that at all. You may think that you do but that is just your opinion. 

 

You still can't let it go can you? The Leavers won the referendum and at the last election they won a vast majority to get Brexit done.

6 minutes ago, billd766 said:

Actually, no we don't know that at all. You may think that you do but that is just your opinion. 

 

You still can't let it go can you? The Leavers won the referendum and at the last election they won a vast majority to get Brexit done.

And now they’re finding out precisely what it is they have ‘won’.

 

 

15 minutes ago, Chomper Higgot said:

I suspect most people would wait to see what taxes are raised and what the money is spent on before declaring it a good or bad move.

Not according to this thread.

 

The bitters have already decried and even mocked the move. Clearly some in life take defeat gracefully and others, not so much.

And they want to make the UK to a tax paradise for companies. It seems they also make it to a tax hell for the citizens - the normal one, not the rich ones.

 

But hey, now the Britons are free from the EU. Who doesn´t like to pay for it with higher taxes? ????

4 minutes ago, CNXexpat said:

And they want to make the UK to a tax paradise for companies. It seems they also make it to a tax hell for the citizens - the normal one, not the rich ones.

 

But hey, now the Britons are free from the EU. Who doesn´t like to pay for it with higher taxes? ????

You may scoff, but you should be worrying how much extra you will be paying in possible tax rises in your respective countries. The British milk cow has left the cow shed.????????????