Welcome to your return. This week, as I promised, I return to Britain and its escalating financial problems.
Capital Economics estimates that the UK Chancellor Rachel Reeves may need to collect up to 24 billion pounds in the next fall budget to restore the temporary store against its main financial base to achieve a balance between current spending by 2029/30.
This number includes about 6 billion pounds in the savings of shelves, after the last U-URNS turned over plans to reduce social welfare payments, potential reduction of productivity growth expectations and immigration expectations.
In the June 29 edition of This newsletterFive low -cost policy tools can be withdrawn to provide a tremor to economic activity in the short term, which in turn would enhance tax revenues.
However, the size of the government’s financial opening – and high borrowing costs – means that the advisor will also need to reduce spending, and most likely, raise taxes.
In the first budget in the party last fall, employers, investors and wealthy people targeted higher taxes. Since then, the work has decreased, the investment has crawled, and the rich in Uber has been actively looking to move abroad.
Nomination of this regiment is an important source of revenues and growth. The Labor Party failed to cancel the recent speculation over wealth taxes. The highest ghost of taxes is sufficient to moisturize the commercial activity and the investor’s confidence.
So I asked UK policy experts how the government might collect money while reducing more damage to growth and political support.
Here is how, starting with some suggestions that can connect the financial opening near the near term:
Extension of freezing to personal tax thresholds
“The expansion of financial clouds, by freezing all tax thresholds to 2029/30, can add approximately 7 billion pounds of tax revenues annually,” and Sanjay Raja, the chief economist in the UK in Deutsche Bank.
Lifting fees on gambling
Harry Cherter Bayner, Executive Director of the Policy Research Institute, recommends simplifying and raising taxes on betting.
He says: “The duty of distant games in Britain – a tax is basically a casino profit on the Internet – is only 21 percent. This is much lower than many other countries.” “Apply the same tax rates via the Internet, casinos, casinos and” machine game duty “, which are paid on profits from personal gambling machines, is also logical.”
It is estimated that raising these tax rates to 41 percent can reach 2.4 billion pounds annually.
Reducing value -added tax exemptions
John Moinhan, a conservative life, says the tax height has proven that it is ineffective in increasing revenues fundamentally in recent years and also risk undermining growth. However, it is noted that if the government simplifies and expanded the complex VAT system in Britain – with its many exemptions – it may quickly enhance revenues.
“We collect value -added tax on less than half of the products. If we collect it closer to the average Organization for Economic Cooperation and Development, we can reduce the actual value -added tax rate to 18 percent of the current 20 percent, and we collect about 17.5 billion pounds annually.”
The suggestion of Moinhan to expand the value -added tax base by reducing the inscriptions, with a reduction in the address rate, can allow Reeves to demand that she did not divide her promise not to raise value -added tax.
The government can also think about reducing the Small VAT with a small £ 90,000. This is higher than most advanced economies, and there is evidence that some companies restrict their size to avoid passing the threshold. The reduction can increase revenues and support growth.
These measures alone will cover most of the expected deficiency of the consultant in its main financial ruling.
Next, there are some most famous suggestions (politically and practically) that can provide significant revenues and savings that exceed the needs close to the period. After all, the great financial improvements are necessary as the demands of the country rise, and it can also help reduce the request of excellent investors to lend to Britain.
Retirement “triple lock” on pensions
Britain’s “triple lock” guarantees that government pensions retire annually through the highest growth in profits, consumer price inflation, or 2.5 percent. It was implemented in April 2012. He promised to keep it.
The system that tracks the growth of profits in the long term will be more sustainable. It will also be more just for workers, who finally finance state pensions.
The Institute of Financial Studies estimates that additional spending in 2050 due to the triple lock may reach 40 billion pounds annually, at the current conditions, for the indexing of profits only.
In the short term, using OBR data, IFS can replace the triple lock with a profit uprising can provide up to 1.4 billion pounds by 2029/30 at conditions today.
Long -term welfare repair
“There is still a strong issue to reform personal independence payments (PIP).” “The system does not work either for demands or public financial.”
PIP is paid to those who suffer from health conditions or disabilities, regardless of their work. The government rushed to the recent efforts to reduce PIP support, which contributed to its turn.
Analysts calculate that billions of pounds will be provided in the long run by updating payments according to the additional costs that individuals already face because of their disability; Raising the frequency of a person’s reassessment; And the creation of more applicable methods of benefits (especially for mental health demands, which have supported childhood increase).
Improving tax collection
After simplifying the sentence of the tax system, analysts recommend strengthening HMRC resources to ensure the collection of more tax it owes.
For evaluation, of 36.7 billion pounds estimated that it is entitled to HMRC by small companies during 2023-24, only 22 billion pounds were collected-a 4.1 percent missing.
Providing the road pricing
The fuel duty brings the cabinet about 25 billion pounds annually. The transition to electric cars – the tax exempt – means that the revenues have decreased, and will continue to do so.
It is a starting point with a flat use of each mile for the use of EVS- with a continuation of other EVS in the face of duty-a reasonable starting point. For evaluation, the 6p-Mile shipment, as well as VAT, will be compensated for the revenue of the fuel duty, According to the decision institution.
John Springford, a co -co -reform center, notes the additional benefits of targeted prices. “The pricing of the dynamic roads, with the high prices in the peak hours on the crowded main roads, by identifying automatic numbers panels, would reduce the cost of delay in transporting goods throughout the country, and reduces the times of passengers by encouraging people to travel outside the peak and enhance more healthy ways to work.”
New York residents have resisted the pricing of crowding for years. After its implementation in January, it appears to have improved it.
This is just a sample of measures that the work can provide at a relative speed. Send your policy recommendations to [email protected] Or on x @Teapperikh90.
Reflection on promises not to raise the income tax, the national employee insurance and value -added tax will give the government more options.
But ultimately, the Cabinet of the Labor Party must express the symptoms it faces now, for its deputies and the wider voters.
The nullification of the business and investment environment does not help the “workers” that the party claims to support. After all, there are fewer employees in salaries today more than they were when the Labor Party started.
The recommendations shown here-including the tax height on the base of the base will need pension payments-to carry more burden. It is not perfect, nor is it painful. Few options.
But if the Labor Party continues to avoid these types of options, this will lead to a deeper pushing Britain to a cycle of low growth and higher taxes.
Food to think
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