Taxes 'could rise by 6p in pound'
Taxes could rise by six pence in the pound over the next 10 years to slash public borrowing, an economic forecaster warned today.
Although cuts and a public sector pay clampdown will halve the UK's deficit over the next five years, the National Institute for Economic and Social Research (NIESR) said more action is needed to reduce borrowing to below three per cent of GDP by 2020.
"We assume it is achieved through income taxes rising by an equivalent of six pence in the pound on the basic rate," NIESR said.
VAT has been seen as a likely target for a tax hike after the election, although NIESR said VAT receipts would be held back by weak spending and higher saving.