Britons 'Face 5p Income Tax Hike'

By Michael Ross
Published on 22 Sep 2008
AddThis Social Bookmark Button
Britons 'Face 5p Income Tax Hike'

Upcoming budget deficits will be way up on Alistair Darling's previous forecasts, reports have suggested.

Income tax could increase by 5p due to the recent financial turmoil, an expert has claimed.

Speaking to the Sunday Times, Ray Barrell at the National Institute of Economic and Social Research said that the tax rise could come about due to a massive increase in public spending - as the government looks to offset the lost revenue resulting from the financial sector's slump over the next few months.

Two new reports back up this point of view, with Capital Economics predicting the budget deficit to increase to £100 billion in 2010-11 - and the Centre for Economics and Business Research claiming today that borrowing will hit £90 billion for the year. As recently as March, chancellor of the exchequer Alistair Darling was predicting a deficit of around £40 billion.

The dramatic disparity between these figures testifies to the extraordinary nature of events which have taken place in the financial sector over recent days. Last Sunday, US investment bank Lehman Brothers went bankrupt due to a dramatic deterioration of its share price - with investors concerned over its ability to raise enough cash to meet its costs.

That same day, Merrill Lynch announced that it would merge with Bank of America in a £25 billion deal, while, last week, under-pressure mortgage lender HBOS merged with Lloyds TSB. The US government then announced an extraordinary £400 billion package to buy up banks' toxic assets in order to boost confidence in the financial sector.

Douglas McWiliams, the CEBR's chief executive, said: "£90 billion is a huge amount of borrowing. Although there is little room to do much about it in the short term, it will overshadow public policy for many years to come."

Money Saving Newsletter

Already registered? Login Here

Email:

We will NOT pass your details on to any third party.

See some of the recent tips you could have benefited from.

Your privacy:

Read our privacy policy.
We are registered with the Data Protection Act (1998): No. Z6245956
details
We are regulated by the Financial Services Authority: No. 415689
details



Add Your Comment

Name: 
Comment: 
You have 1000 characters left.

Comments (1)

Any opinions expressed below are solely those held by individual users and are not in any way endorsed by, or representative of those held by Money.co.uk. We accept no responsibility or liability for the accuracy or content of any material submitted and maintain the right to publish, remove or edit it as we see fit.
Fleeced
23rd Sep 2008 08:59
I can't wait to see the demise of this shambolic government. How can we sit back and let them rot the country just because they know theIr out at the next election?

We need a new way of controlling Government.

Latest Tax Articles & News

Tax Articles

People on Very Low Wages 'Still Losing Out'
People on Very Low Wages 'Still Losing Out'

The Chartered Institute of Taxation (CIOT) has said that very low earners are "still losing out" despite tax changes in the pre-Budget report.

VAT Reduction Begins Today
VAT Reduction Begins Today

The sales tax will now be 15 percent, down from its previous level of 17.5 percent.

Duty-free Allowance Doubles
Duty-free Allowance Doubles

The duty-free allowance on 'other goods' has more than doubled, with effect from today.

IT Difficulties 'Could Hit VAT Reductions'
IT Difficulties 'Could Hit VAT Reductions'

A research company has warned that difficulties updating IT systems could delay retailers introducing the VAT reduction.

US Crackdown 'Could Affect UK Tax Havens'
US Crackdown 'Could Affect UK Tax Havens'

A crackdown on tax havens by US president-elect Barack Obama could hit UK-controlled areas like the Isle of Man and the Channel Islands, an expert has said.

Government Denies 'Planned VAT Rise' Claims
Government Denies 'Planned VAT Rise' Claims

Conservative leader David Cameron says that the government is planning a "secret tax bombshell".

Customs Duty Change
Customs Duty Change 'Not a Massive Incentive'

The British Retail Consortium has said that changes to the customs duty rules on goods bought outside of the EU are 'not a massive incentive' to buy online.

The 'No Questions Asked' Appeal of Secret Swiss Bank Accounts is Under Threat
'No Questions Asked' Appeal of Secret Swiss Bank Accounts Under Threat

US citizens are set to appeal against the Swiss governments decision to share details of formerly private UBS investments with the IRS.

Popular Related Articles

Duty-free Allowance Doubles
Duty-free Allowance DoublesThe duty-free allowance on 'other goods' has more than doubled, with effect from today.

Latest Related Headlines

Mandelson Rules Out Adopting Euro
Mandelson Rules Out Adopting EuroThe business secretary denied that the government was planning to switch from the pound.
RSS FeedLatest Headlines
Free Services Money Saving Newsletter
The best money saving deals, freebies, rate alerts and advice emailed to you every week.
Enter your email:
Find Companies Money Guides RSS Feeds - Subscribe!
The "advice" given in our money saving tips is for information purposes only and should not be construed as "financial advice".
money.co.uk recommends you seek professional advice before proceeding with any investment or financial decision.
Site Map | Privacy Policy | About Us | Contact Us
money.co.uk is a trading name of Dot Zinc Limited, who are authorised and regulated by the Financial Services Authority. FSA Registration Number: 415689.
Copyright © www.money.co.uk / Dot Zinc Limited 2002-2008. All rights reserved.
Home | Login | Sign Up