Does Jeremy Hunt have the cash to spend on tax cuts in his spring Budget next week? That’s the billion pound question that the Institute for Fiscal Studies (IFS) focused on during its pre-Budget briefing this morning, hosted by Director Paul Johnson and Deputy Director Carl Emmerson.
As Ross Clark notes on Coffee House, the latest rumours suggest that the Chancellor is pivoting away from an income tax, inheritance tax or stamp duty cut (the last of which is considered most desirable by economists, including those over at the IFS, due to how badly it distorts the housing market and weighs down growth). Instead he may be opting for another penny off employee National Insurance. But whatever is offered up, it is likely to only ‘offset a small proportion of the increase in tax that we’ve seen since 2019’ says Emmerson. He notes that relative to the 2018-19 fiscal year, taxes will now be ‘about £66 billion higher than what they would have been if we had preserved them at the same share of national income’.
In other words, even if Hunt gets the tax burden falling – which didn’t happen in the Autumn Statement – this is still set to be the ‘biggest tax-raising parliament that we’ve seen since the Second World War’.
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