Economics -
Taxes 2
Taxes
may have to rise by £10 billion a year by 2008
as the Government balances increased spending
against lower growth. A report, by accountancy
firm Price Waterhouse Coopers, says although
there is no immediate need for further tax
increases in this year's Budget, taxes are likely
to have to rise in the longer term. The
prediction came as PWC said slower-than-expected
growth in the economy and in tax revenues meant
the Treasury could miss its Budget deficit target
by £6 billion for the year 2003/4. It forecasts
the economy will grow by just 2.25% this year,
lower than the Treasury's forecast of 2.5%-3%, as
weaker global economic prospects and subdued
investment by UK companies takes effect. As a
result, the Budget deficit is forecast to rise
from £22 billion in 2002/3 to £30 billion in
2003/4 - higher than most City forecasts and
above the Treasury's current forecast of £24
billion.
John Hawksworth, head of the macroeconomics unit
at PWC, said, "The Treasury's public finance
projections looked rather optimistic when they
were published last November and appear even more
so in the light of subsequent events. The
Chancellor will rightly not be too concerned
about a short-term cyclical rise in public
borrowing, but it seems unlikely that tax
revenues will recover as fast as he projects in
the medium term. Taxes may therefore need to rise
significantly at some point over the next three
or four years, even if public spending growth
moderates after 2005.
The report says based on the assumption that
economic growth averages 2.5% and total public
spending is kept constant as a share of GDP, the
required tax increases would amount to around 1%
of GDP by 2007/8, which is equivalent to around
£10 billion. Mr Hawksworth adds two possible
ways of raising taxes could be through further
National Insurance increases or increasing the
rate of VAT.
Taxes
have risen by the equivalent of 7p on the basic
rate of income tax since Labour were elected in
1997. Think-tank Reform said Chancellor Gordon
Brown will have hiked taxes by £23billion-a-year
once National Insurance contributions and council
tax rises kick in on April 6 2003. It said a
couple on average wages will now pay £1,763 more
tax a year, while parents on the same earnings
but with two kids will pay £986 extra. A single
man will pay £930 more.
Doctors
rejected the idea of a new VAT on fatty foods to
help tackle the UK's mounting obesity problem.
The British Medical Association held a conference
on public health and one of the motions for
debate called for a new health tax on saturated
fats. The idea was proposed by the St Helens and
Knowsley local medical committee. Currently in
the UK, one in five adults is obese and 20% of
children are considered overweight. The idea was
that the tax could help cover the high cost to
the NHS of treating obesity, and might help
change people's behaviour.
Dr Louise Smith, a specialist registrar in public
health, told the conference: "Public health
is not just about education. We have to use
policy measures to improve health." However
Sir Alexander Macara, chairman of the BMA's
public health consultative committee, warned,
"To put a tax on any food is bound to hit
the poorest and most vulnerable." The motion
was overwhelmingly defeated by doctors attending
the one-day conference in London. However they
did vote in favour of a ban on TV advertising of
processed foods until after the watershed to
protect children's health. They're all in
McDonald's at that time anyway!
<<<
Prev --------------------------------------------------------Next >>>
Home
These articles
have been collected from various sources. If you
are the copyright owner of any of them, contact us for
either a credit and link to your site or removal
of the article.
--------------