IFS predicts difficult to avoid tax increases over next five years

IFS predicts difficult to avoid tax increases over next five years

As the UK heads into another general election, the spotlight has once again turned to the country’s public finances. The Institute for Fiscal Studies (IFS) has issued a stark warning, claiming that both Labour and the Conservatives have avoided addressing critical issues around taxes and spending in their manifestos. The IFS highlighted that the UK is facing its highest debt level in over 60 years, with taxes near record highs and public services struggling to cope.

The think tank accused the main parties of turning a blind eye to the tough choices that lie ahead, with the country facing a “trilemma” of whether to raise taxes, implement spending cuts, or increase borrowing. However, the manifestos of both parties have failed to provide clear answers on how they plan to tackle these challenges.

Despite ruling out increases in income tax, National Insurance, and VAT, the IFS believes that it will be inevitable for taxes to rise over the next five years. The think tank also criticized the lack of transparency in the manifestos, particularly around freezing income tax thresholds and cracking down on tax evasion.

The IFS also examined the manifestos of the Green Party and Reform, highlighting unrealistic spending plans and proposed tax cuts that are not feasible. This, according to the IFS, contributes to “poisoning” the political debate by presenting unachievable solutions as viable options.

In response to the IFS’s analysis, Labour leader Sir Keir Starmer emphasized the need for economic growth to address the stagnation the country has experienced over the past 14 years. However, the Conservative Party and the Liberal Democrats have yet to comment on the IFS’s findings.

As the election draws nearer, the IFS’s warnings serve as a reminder of the tough decisions that the next government will have to make to address the country’s fiscal challenges. It remains to be seen how these issues will be tackled in the coming years, but one thing is clear – tough choices lie ahead for whoever wins the election.