Autumn Statement cuts won’t stop tax revenues rising to highest ever levels
The tax cuts announced in the 2023 Autumn Statement won’t prevent tax revenues rising to their highest ever levels, the Institute for Fiscal Studies (IFS) has warned.
The IFS stated that announcing tax cuts in response to ‘highly uncertain’ changes in assumptions about the UK’s medium-term economic prospects ‘does not feel like a recipe for good management of the public finances‘.
It also acknowledged that the Chancellor’s cuts to the rates of National Insurance contributions (NICs) put money back into the pockets of 27 million workers. However, it said the bigger picture means that the changes give backless than £1 of every £4 that has been taken away from households through changes to NICs and income tax announced since March 2021.
However, the business group did welcome the Chancellor’s decision to make Full Expensing permanent but noted that the move indicates that the Autumn Statement was an event focused on medium-term growth.
Paul Johnson, Director of the IFS, said:
‘The growth outlook has weakened. Inflation is expected to stay higher for longer. Higher inflation pushes up tax receipts by more than it pushes up spending on debt interest or social security benefits.
‘His immediate cut to national insurance will put more money into workers’ pockets when it comes in but won’t be enough to prevent this from being the biggest tax-raising parliament in modern times. These cuts will also not stop tax revenues rising to their highest ever levels.’
Internet link: IFS website