How Would You Raise the £8billion Shortfall?

The institute of Fiscal Studies have made an indepth analysis of the UK economy and have come to the conclusion that the UK government will need to raise taxes by £8billion or cut spending by £8billion.

The chancellor has been overoptimisitc in projected tax revenues, assuming that rates of growth would always remain high. However, as the economy begins to slowdown tax revenues are likely to be less than expected - leaving the government with the prospect of breaking its own golden rule on borrowing.

The instinctive response is to perhaps say, well the government shouldn’t have wasted so many opportunities in the past. With high levels of growth they could have taken the opportunity to reduce national debt, rather than add to it.

Nevertheless, the government is likely to face some unpleasant choices, none of which will appeal to the taxpayers and business.

These are a few options

• Windfall tax on companies like Shell who made record profits this week
  
• Increase tax on cigaretes
• Increase tax on motorists and petrol
• Increase retirement age
• A Fat Tax
• Increase income tax
• Cut spending (or at least limit growth in public sector spending)

£8billion at Evanonomics