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From The Times
January 31, 2008

Government 'needs to raise extra £8bn in tax'

Robert Lindsay and Grainne Gilmore

The Government needs to raise taxes by £8 billion, or £250 for each family in the UK, to meet its own targets on public finances, a respected economic think-tank said yesterday.

The Institute for Fiscal Studies (IFS) said one way the Government could raise the money would be to reverse its much-heralded decision to cut the basic rate of tax.

From April, the basic rate of tax is set to fall from 22 per cent to 20 per cent. Carl Emmerson, deputy director at the IFS said: “The Government will be reluctant to raise taxes because of concerns about the economy and also for political reasons - after all, it's much easier to cut taxes than to raise them.”

In its annual Green Budget the IFS warned that if the Chancellor did not change course, public sector net debt would breach the Government's own threshold of 40 per cent of GDP in 2009, reaching 41.2 per cent by 2012.

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Mr Emmerson said: “The Government needs to act in the upcoming budget. If it doesn't announce more tax-raising measures, it will break its own rules.”

The IFS predicted that Government borrowing would top £40 billion in each of the three coming years, putting Alistair Darling at risk of breaking the “golden rule” of balancing the books over an economic cycle.

And it suggested that state support for Northern Rock could add £100 billion to net debt - 7 per cent of national income - if the Office for National Statistics ruled that it must be included on the Government books or if the Government nationalised it.

This would easily breach the 40 per cent ceiling set by Gordon Brown, the report said. However, it added that the eventual impact of Northern Rock would be much smaller once its mortgage book was sold.

It urged the Government to produce two sets of public finance figures, excluding and including Northern Rock, to make the cost of propping up the ailing bank clear.

The report warned that tax revenues may not grow as strongly as hoped by an “over optimistic” Treasury - because of the credit crunch, lower profit growth on corporation tax and lower stamp duty income because of falling property and share prices.

The average public sector worker is remunerated by 20 to 25% more than than the average private sector worker. The Government's own published figures showed they are paid on average 3% more in salary, yet work 17% fewer hours. The Institute of Fiscal Studies has calculated that public sector pensions equate to a 12% salary benefit compared to private sector workers. Public sector workers have much higher job security as well !!!

Perhaps this could be justified if we had world class public service outcomes. Our private sector produces the fifth highest GDP per head in the world. And the public sector ? School student results (OECD benchmark) and NHS outcomes are now approaching Slovenia levels !!!

This is what Brown means by "I am happy with the fiscal arithmetic". We are funding excessive public sector rewards of at least 50 billion pounds p.a. More than enough to wipe out the deficit.

Brown is a trade union stooge, bureaucrat and economic incompetent.

SB, London, UK

This government has raised countless billions more in tax than their predecessors did and might now need to raise billions more to satisfy a largely arbitrary target which Brown has manipulated so much over the years that any relevance it may have had is long since gone.
Labour always used to be about tax & spend. The party may be 'New' but the habits certainly aren't!
What's the betting that Brown & Darling between them will just about manage to get the economy into a recessionary nosedive in time for the election, which will then take their successors years of pain to get out of - it'll be 1979-1985 all over again . . . .

Bill, Ramsey, Cambs

The thing to hit is the car. Preferably with invisible taxes like ones on retail parking spaces. In the near future we'll have no option but to reduce car use drastically. We can both get the real economy ready for that transition and balance the books in the short term by increasing the tax take now.

Malcolm McLean, Bradford, UK

While we're squandering money on benefits claimed by economic migrants for children living overseas, sponsoring the births of children to immigrant mothers to the tune of £250 million while our own women and children are being turned away, while this government stands by and fiddles while hundreds of thousands of immigrants pour into the country at an uprecedented rate, many not working, not integrating and not contributing, bleeding us dry, adding further congestion on our roads, taking our housing, putting more and more pressure on our infrastructure, giving this government even more reason to tax us still further and against all this, while we can't GIVE our elders, the people we owe a massive debt to, the care they need when they need it because they've had the audacity to have worked hard and amassed a FORTUNE of £20,000 or more, this goverment can go WHISTLE! Lousy, stinking, wastrels. Why, I'd like to stick my fingers up their noses and use their heads as bowling balls! Grrr!

Mary Allen, London,

8 Billion more tax? - families of MPs are getting more and more expensive to run...

Bill Bird, Wallasey, Wirral

Although we're looking at public finances if criteria such as economic structures controlling areas of the banking system and financial markets were implemented taxes and credit would not be deemed so challenging. Why on earth Cecil Parkinson did not take note of this point before liberalising the financial markets under Thatcher is beyond my comprehension which is why I comprehend the government's reluctance to increase taxes for economic and political reasons completely.

Marie-Claire Oliver, Bath, United Kingdom

40% sounds innocuous but lets talk money. Over £500bilion public debt at the last count and this will rise to about £550 billion by the end of this fiscal year. With the economy stalling, tax revenues falling and record public pension liabilitities in excess of £1000 billion, I see major problems ahead.
UK Plc needs to drastically cut public spending by removing 'jobsworths', quangos and backroom civil servants There also should be an overall reduction in public sector pension benefits.
Middle Britain is quietly seething at the moment but we will see a major exodus of talent nothing is done about this.

Steve Marchant, Torquay, UK

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