- Written by Joshua Nevett
- political reporter
UK tax levels are at their highest since records began 70 years ago and are unlikely to fall, a leading think tank has said.
The Institute for Fiscal Studies (IFS) predicts that taxes will reach around 37% of national income by the next general election, scheduled for 2024.
IFS report On the eve of the Conservative Party conference, calls for tax cuts were reignited by Tory MPs.
The government says its priority is to contain price increases.
Next year, the government will collect more than £100bn more in tax than pre-2019 levels, according to the IFS.
This is not a direct result of the coronavirus pandemic, which has led to a surge in government spending to keep the economy afloat, the think tank argues.
Rather, it reflects decisions to increase government spending, Britain’s aging population and pressures on the health service.
In recent years, the government has announced a series of tax increases, including increasing corporate tax from 19% to 25% and taxing the profits of energy companies.
Paul Johnson, director of the IFS, said: “Tax is expected to increase by around 4% of national income, or around £100 billion, in this parliament.”
He added that the UK’s tax revenue remains about average for rich countries and below that of other European countries.
“Looking to the future, as the population ages, we’re going to see more spending on things like pensions and health care,” Johnson said.
“In my view, this is almost certainly a permanent tax increase.”
Treasurer Jeremy Hunt, who is expected to reveal his economic plans in his autumn statement in November, said last week that cutting taxes was “virtually impossible” at the moment.
A Treasury spokesperson said “the most effective tax cut we can achieve” is to “control inflation”.
But supporters of former prime minister Liz Truss and other Conservative MPs are renewing their calls for tax cuts to boost economic growth.
Mr Truss told the BBC: “This unprecedentedly high tax burden is one of the reasons why the UK economy is stagnant.”
Another Conservative MP, John Redwood, said there were “affordable tax relief measures” such as raising the VAT threshold for businesses and lowering fuel duty.
Labor has ruled out any unfunded tax cuts or spending pledges if it wins power in next year’s general election.
Commenting on the IFS report, leader Sir Keir Starmer said: “There’s a big reason why our country has some of the highest taxes on record, and that’s because this government has failed miserably on growth.” Stated.
The Liberal Democrats claimed the Conservatives were “destroying the economy” under Mr Truss and “making people pay the price”.
In an interview with the BBC on Thursday, Mr Sunak said he believed halving inflation by the end of this year was the “most important” of the five pledges he made in January.
The inflation rate (price increase rate) was 10.7% for the three months from October to December 2022, meaning the government aims to reduce the inflation rate to 5.3%.
The inflation rate in August was 6.7%.
“Inflation is falling and there is light at the end of the tunnel, but we need to stick to our plans,” Mr Sunak said.