IFS reacts as Starmer warns of 'painful' autumn Budget
Director of the Institute for Fiscal Studies Paul Johnson said neither party was being honest in the election about raising taxes after Keir Starmer warned autumn's Budget would be "painful." "They've said they won't increase income tax, national insurance, VAT or corporation tax. Three-quarters of our tax revenue comes from those four taxes and if they're not going to raise those, it leaves them with a very limited number of options," Mr Johnson said. Report by Kennedyl. Like us on Facebook at http://www.facebook.com/itn and follow us on Twitter at http://twitter.com/itn
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00:00It's certainly the case that the new government has inherited a very difficult situation in
00:04terms of tax and spend and the public finances. It's not really true to say that it's a lot
00:09worse than we knew before the election. There's a little bit of additional information, but
00:14we knew before the election there was a big problem here. We knew before the election
00:18that if they wanted to avoid cuts, they would have to increase taxes. And as we at the IFS
00:22said time and time and time again, neither party was being honest with the electorate
00:26about this before the election. One of the problems I think the government's got is they've
00:31tied their hands really severely in terms of taxes. They voted for the £20bn of tax
00:37cuts that Jeremy Hunt introduced over the last year or so, and they've said they won't
00:41increase income tax, national insurance, VAT or corporation tax. Well, three quarters of
00:46our tax revenue comes from those four taxes, and if they're not going to raise those, it
00:50leaves them with a limited number of options. They might mess around with pension taxation,
00:55they might change capital gains taxes. There are one or two other changes they can make
01:00to things like inheritance tax, but it's difficult to get big amounts of money without taking
01:04economic risks with those sorts of taxes.