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