Parties ‘not being honest’ on likely tax rises

Business & Economy 29 May 2017
Parties ‘not being honest’ on likely tax rises

Tories and Labour not being honest with voters on likely tax rises, IFS warns

The two main parties are not giving the full picture on how much taxes may need to rise to support public services, says a report.

Image: Neither Mrs May nor Mr Corbyn are addressing 'long-term challenges', says the IFS

Neither of the two main political parties are "being really honest with the public" over their tax and spending plans, a think-tank has warned.

In its assessment of the Conservative manifesto, the Institute for Fiscal Studies (IFS) warned the Tory focus on cutting immigration risked a £6bn hit to the Exchequer.

Carl Emmerson, deputy director of the IFS, said the Tory commitment to reducing net migration down to the "tens of thousands" would "cause considerable economic damage" particularly when coupled with the ageing British population.

In addition, the party's plans for continued austerity may prove impossible to deliver without causing serious damage to services including the NHS.

"They could allow the deficit to shrink over time with no additional tax rises over the coming parliament. But getting to budget balance by the mid-2020s, their stated aim, would likely require more spending cuts or tax rises even beyond the end of the next parliament," the IFS said.

:: Conservative manifesto – what it says and what it means

Video: Tory manifesto: Not much concrete detail

Mr Emmerson dismissed Theresa May's plans to reduce benefits to the elderly by means-testing the winter fuel payment and scrapping the pensions triple lock as making "wholly trivial" savings.

He said the manifesto u-turn over a cap on care costs would result in "presumably increasing public spending overall".

"The Conservatives simply offer the cuts already promised. Additional funding pledges for the NHS and schools are just confirming that spending would rise in a way broadly consistent with the March Budget," said Mr Emmerson.

"Compared with Labour, they are offering a relatively smaller state and consequently lower taxes. With that offer come unacknowledged risks to the quality of public services, and tough choices over spending."

The IFS' assessment of the Labour manifesto was just as damning.

:: Labour manifesto – what it says and what it means

Video: Labour manifesto: Do the sums add up?

It warned the party's plans for tax hikes aimed at top earners and businesses may "not raise anything like" the £48.6bn claimed.

Mr Emmerson said: "For Labour we can have pretty much everything – free higher education, free childcare, more spending on pay, health, infrastructure.

"And the pretence is that can all be funded by faceless corporations and 'the rich'."

He said there was "no way that the tens of billions of pounds of tax rises they promise" could be borne by the top 5% of earners and big business.

Labour's proposals would raise spending to its highest level since the mid-1980s and tax levels to record levels in peacetime, the think-tank said.

Mr Emmerson said: "The shame of the two big parties' manifestos is that neither sets out an honest set of choices.

"Neither addresses the long-term challenges we face."

IFS director Paul Johnson added: "Neither is being really honest with the public."

Posted in:

  • General Election 2017
  • Labour
  • Conservatives

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