Rachel Reeves, the Chancellor, is expected to introduce a £25 billion tax increase in this month's budget to avoid plunging Britain back into austerity, according to the Institute for Fiscal Studies (IFS). This tax increase is essential to ensure public spending can rise as promised, even in a less stringent fiscal environment.
The IFS estimates that even if Labour's proposed tax reforms generate £9 billion, an additional £16 billion in tax rises would be necessary to ensure departmental budgets grow in line with national income, making a total tax increase of £25 billion necessary.
Paul Johnson, director of the IFS, indicated the significance of the upcoming budget, saying that it could be 'the most consequential since at least 2010' as it’s essential for the new chancellor to fund public services and investment through tax increases or borrowing.
Reeves is reportedly looking at various tax adjustment options including an increase in employer national insurance contributions which could generate around £8.9 billion, as well as considering measures such as imposing VAT on private school fees and higher levies on oil and gas companies.
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