
The Today programme this week picked up on a warning from the Office of Budget Responsibility that income tax receipts so far this fiscal year have fallen by 0.8 per cent against a full year forecast of a 6.5 per cent rise.
The OBR has said that despite strong employment growth, the decline has been due in part to weaker than expected wage growth, and the fact that a greater proportion of wages and salaries is subject to the £10,000 personal allowance.- In the short term, pressure can be applied on HMRC to maximise its collections from individuals and businesses.
- He can raise taxes – but this is unlikely given his recent conference speech in which he made clear that “the option of taxing your way out of a deficit no longer exists, if it ever did”.
- He can borrow more in the short term – unpalatable but inevitable?
- He can further reduce corporate taxes to stimulate economic growth and/or drastically cut the size of government using the template of Sir John Cowperthwaite, Financial Secretary in Hong Kong in the 1960s.
Share this story