Daily Management Review

UK needs to raise taxes by $ 52 billion annually to stabilize national debt - experts


The British government needs to raise taxes by more than 40 billion pounds ($ 52 billion) annually until 2025 to stem the rise in public debt due to the pandemic crisis. This forecast was made by the London Institute for Economic Research (IFS), according to the Financial Times on Tuesday.

Annual government loans could reach £ 350bn ($ 456.5bn), or 17% of GDP, the highest peacetime government borrowing in three centuries. In March this year, this figure, according to the Office of Budgetary Responsibility (OBR), should not have exceeded 55 billion pounds ($71.7 billion).

About two-thirds of the increase in the tax component, as noted in the IFS report, is necessary to offset the additional costs of supporting public services and reduce the economic impact of the introduction of a national quarantine. According to the deputy director of the Institute, Karl Emmerson, it will be almost impossible for the Conservative government in the current environment to balance the budget, as it announced earlier, and it will be necessary to take drastic measures.

The size of the United Kingdom's public debt in July for the first time exceeded 2 trillion pounds (more than 2.6 trillion dollars), exceeding the size of the kingdom's GDP.

As previously reported, the UK Treasury is developing plans for the greatest tax hike in several decades to offset budget losses. In particular, we are talking about the possibility of increasing the base tax rate on selling assets from 10% to 20% and the tax on selling a second apartment or house from 18% to 20%. For wealthier citizens who pay taxes at an higher rate, their size can be increased to 40% (from the current 28% and 20%, respectively).

UK Treasury also intends to raise corporate income tax to 24%, which will raise an additional £ 12 billion ($ 16 billion) to the budget next year and £ 17 billion ($ 22.7 billion) in 2023-2024 biennium.

source: ft.com