Tax levels in the UK have reached their highest level as a proportion of the nation’s income since the mid-1980s.
Research conducted by the Institute for Fiscal Studies (IFS), an influential think tank, concluded that taxes are set to soar by some £17billion over the lifetime of this Parliament.
This would see the share of income raised through taxation reach 37 per cent – a level not exceeded since 1986. This is despite previous commitments by the Government not to increase the levels of income tax, National Insurance (NI) or VAT in this electoral cycle.
Analysts point out that additional revenue will be raked in through the continued use of so-called “stealth taxes”, such as the apprenticeship levy and increased tax on insurance.
The financial picture was set out in the IFS’ annual ‘Green Budget’, which is traditionally published four weeks or so before the Chancellor’s fiscal statement.
And it is feared that with the Government still working to clear the deficit, the trend is set to continue into the next decade.
Paul Johnson, IFS director, said: “The new Chancellor [Philip Hammond] may not find it all that easy to meet his target of eliminating the budget deficit in the next Parliament.
“Even on central forecasts, that is going to require extending austerity towards the mid-2020s. If the economy does less well than hoped then we may see yet another set of fiscal rules consigned to the dustbin.”
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