Promises of tax cuts during general election campaigns may have to be rolled back as the UK economy faces some of its worst problems since the 1950s, a leading think tank has said.
“Tax cuts today add to the risk of tax rises or spending cuts tomorrow,” the Institute for Fiscal Studies said.
Politicians need to be honest about tough economic trade-offs, it added.
Politicians need to be honest about tough economic trade-offs, it added.
IFS director Paul Johnson said that if political parties looking to form the next government “are promising tax cuts, let’s hear where the spending cuts will fall”.
“It might be easy to announce immediate tax cuts, without any hint of what it is the state currently does that it will stop doing, or what taxes will rise in future, but this trade-off cannot be wished away,” the IFS’s report said.
The government gets most of its income from taxes, but if it cannot cover its spending, it has to either borrow more, raise taxes, or cut public spending.
Last month, government borrowing was lower than expected, and interest payments on debt dropped sharply due to a fall in the rate of inflation.
Analysts said this gave the Chancellor, Jeremy Hunt, more “wiggle room” to cut taxes.
Promises of tax cuts during general election campaigns may have to be rolled back as the UK economy faces some of its worst problems since the 1950s, a leading think tank has said.
Politicians need to be honest about tough economic trade-offs, it added.
“Tax cuts today add to the risk of tax rises or spending cuts tomorrow,” the Institute for Fiscal Studies said.
IFS director Paul Johnson said that if political parties looking to form the next government “are promising tax cuts, let’s hear where the spending cuts will fall”.
Politicians need to be honest about tough economic trade-offs, it added.
Politicians need to be honest about tough economic trade-offs, it added.
IFS director Paul Johnson said that if political parties looking to form the next government “are promising tax cuts, let’s hear where the spending cuts will fall”.
“It might be easy to announce immediate tax cuts, without any hint of what it is the state currently does that it will stop doing, or what taxes will rise in future, but this trade-off cannot be wished away,” the IFS’s report said.
The government gets most of its income from taxes, but if it cannot cover its spending, it has to either borrow more, raise taxes, or cut public spending.
Last month, government borrowing was lower than expected, and interest payments on debt dropped sharply due to a fall in the rate of inflation.
Analysts said this gave the Chancellor, Jeremy Hunt, more “wiggle room” to cut taxes.
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