COVID TAX HIT
Families face paying £125 extra month to plug £40billion tax hole from Covid
FAMILIES face paying an extra £125 a month to plug the £40billion tax hole from the coronavirus crisis, a think tank has warned.
The Institute of Fiscal Studies (IFS) said that the tax hikes would have to come within the next five years to stop government debt spiralling out of control.
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The tax hikes would see all 27.4million households charged an extra £29 a week with an increase of 6p on both the basic and higher rate of income tax.
But finance expert Carl Emmerson from the IFS pointed out to The Sun that "any tax rise is unlikely to be shared equally."
As well as the monster tax bill warning, the IFS predicts that government borrowing this year will hit a level not seen outside the two world wars.
And as the economy shrinks amid lockdown measures, Chancellor Mr Sunak faces a further hit to tax revenues which could easily exceed £200billion, it adds.
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The think tank says the UK is on the brink of the highest unemployment since the early 1990s.
Mr Sunak has already signalled that taxes will rise next year, saying it will be "tricky" to meet Tory manifesto commitments not to raise income tax, VAT or National Insurance.
The damning report comes as the Institute for Public Policy Research (IPPR) warns that the Chancellor's latest Job Support scheme will only save around 230,000 jobs.
The support will not stop 1.8million more roles being axed.
The study by the IPPR also suggests the jobs preserved will be a drop in the ocean compared with the total of four million expected to be made unemployed as a result of the pandemic.
The major IFS report, out today, says public sector debt is forecast to be just over 110 per cent of national income in 2024-25.
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The think tank adds that even if ministers are content to keep debt at 100% of national income and borrowing at about £80billion a year, that will still require “fiscal tightening” amounting to more than £40billion in today’s terms.
IFS director Paul Johnson said: “Debt, now at its highest level in more than half a century, will carry on rising without action.
“Big tax rises look all but inevitable, although likely not until the middle 2020s.”
Rishi Sunak vows 'there is hope' and he'll help thousands into new jobs - but tax rises to come to pay for coronavirus
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