Britain’s two main political parties have been accused of a conspiracy of silence over the scale of tax rises facing the country after the election.
In a new report on ther UK's financial health, the Institute of Fiscal Studies said it would be a considerable surprise if tax doesn’t go up for the next five years.
According to the IFS, the only uncertainty is the specific taxes that are going rise with debt interest and commitments to healthcare and defence spending adding to pressure on already-strained public finances,
Paul Johnson, the think tank’s director, said both Labour and the Conservatives are guilty of refusing to talk about the reality facing the country.
“These raw facts are largely ignored by the two main parties in their manifestos,” he says with both committing to no rises in income tax, VAT or National Insurance.
“That huge decisions over the size and shape of the state will need to be taken, that those decisions will, in all likelihood, mean either higher taxes or worse public services, you would not guess from reading their prospectuses or listening to their promises.
“It will be a considerable surprise if no other taxes are increased over the next five years.”
Britain’s tax burden currently stands at 36.5% of GDP but will increase to 37.1% over the next five years, the highest level since 1948 according to the Office for Budget Responsibility.
Johnson said Tory promises to crack down on tax avoidance and evasion to raise £5bn will hit small businesses and the self-employed, while Labour proposals to tax non-doms and private schools won’t be enough.
“Taken at face value, Labour’s promise of ‘no tax increases on working people’ rules out essentially all tax rises. There is no tax paid exclusively by those who don’t work. Who knows what this pledge is really supposed to mean.”
The Conservatives meanwhile have promised to cut the welfare bill even though the number of working-aged people claiming disability benefits is predicted to double between 2019 and 2029.
As for the NHS, neither party has come up with any viable plan to fund their promises, says the IFS, with everything depending on the uncertain forecast that the economy will start to improve.
Johnson added that Labour and the Tories hadn’t funded their plans in the current environment so “We certainly don’t know how they would respond if things were to get worse.”