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UK parties not giving full picture on likely tax rises - IFS
May 26, 2017 / 8:07 AM / 6 months ago

UK parties not giving full picture on likely tax rises - IFS

LONDON (Reuters) - Britain’s two main political parties are not giving the public the full picture about how much taxes will need to rise in order to support public services after next month’s election, a leading think tank said on Friday.

An English ten Pound note is seen in an illustration taken March 16, 2016. REUTERS/Phil Noble/Illustration

Prime Minister Theresa May’s Conservatives were likely to need to raise taxes to balance the budget and maintain the quality of public services, while the opposition Labour Party’s plans to raise corporate taxes would hurt the wider public, the non-partisan Institute for Fiscal Studies said.

“Neither is being really honest with the public,” IFS director Paul Johnson said.

May has seen the Conservatives’ lead in opinion polls narrow since she unveiled her party’s policy pledges last week.

In a sign the election could be more closely contested than has previously been thought, YouGov said on Thursday that support for May’s party stood at 43 percent, down 1 percentage from a week ago, while Labour was up 3 points on 38 percent.

May had to backtrack on Monday on plans to make older Britons pay a greater share of their care costs, and has left the door open to raise income tax and payroll taxes.

“It is likely that the Conservatives would either have to resort to tax or borrowing increases to bail out public services under increasing pressure, or would risk presiding over a decline in the quality of some of those services,” Johnson said.

Labour plans a big rise in taxation to fund public services which would take the tax burden on the economy to its highest in 40 years - though it would not be especially high by the standards of other European economies, the IFS said.

But the tax rises would affect more people than the party’s focus on the top 5 percent of earners might suggest, it said.

“Labour should not pretend that such a step-change could be funded entirely by a small minority at the very top. In particular the large increase in company taxation that they propose would undoubtedly affect a far broader group than that,” Johnson said.

Reporting by David Milliken; Editing by William Schomberg

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