Hunt must spell out how tax cuts would be paid for – IFS
A prominent think tank has cautioned against the government’s plan to cut taxes in the upcoming Budget unless it can clearly articulate how it intends to finance them.
The chancellor has suggested a desire to reduce taxes in what may be the final Budget before a general election. However, the Institute for Fiscal Studies (IFS) has deemed the justification for tax cuts as “weak.”
The government has refrained from commenting on the affordability of further tax cuts in the Budget. However, both Jeremy Hunt and Rishi Sunak have openly expressed their intention to lessen the tax burden on the public. Chancellor Hunt recently hinted at exploring reductions in public spending as a means to facilitate tax cuts.
Any tax cuts “should wait” until the chancellor was able to do a detailed spending review, the think tank added.
“We don’t think we should be implementing certain tax cuts now, essentially that are paid for by uncertain spending cuts that might never be delivered,” IFS deputy director Carl Emmerson said.
The IFS said taxes in the UK were heading to record-high levels when measured against the size of the overall economy. However, government debt was also high and rising, and “barely on course” to be falling in five years’ time – one of the government’s self-imposed rules.