Belfast Telegraph

UK Website Of The Year

Voters not given 'honest choices' on tax and spending, think tank says

Voters are not being offered an "honest set of choices" on tax and spending by the two main political parties amid concern over gaps and mistakes in their manifestos, an economic think tank has claimed.

The Institute for Fiscal Studies (IFS) flagged up factual errors in Labour's calculations, warning its tax hikes aimed at top earners and businesses may "not raise anything like" the £48.6 billion claimed and that the party's proposals could turn out to be "economically damaging".

The IFS added Labour would "raise spending to its highest level since the mid-1980s and tax to record levels in peacetime" - a claim disputed by L abour leader Jeremy Corbyn as he faced questions about his party's economic plans during a BBC One interview with Andrew Neil.

Britain could face "another parliament of austerity" under the Tories, the IFS warned, saying continued austerity could cause serious damage to the ability to deliver services and laying out serious doubts over the deliverability of its plans for the NHS.

The think tank also condemned Conservative moves to curb net migration to 100,000, saying it risked a £6 billion hit to the Exchequer.

Giving his assessment of the parties' plans, IFS deputy director Carl 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. 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'.

"There is a choice we can make as a country to have a bigger state. That would not make us unusual in international terms.

"But that comes at a cost in higher taxes which would inevitably need to be borne by large numbers of us."

On Labour, the IFS queried whether taxes such as the offshore tax levy and the cap on excess pay would generate income.

The think tank also pointed to "risky" plans to boost corporation tax amid uncertainty over Brexit, while claiming that plans to boost the minimum wage could be "economically damaging".

Referring to Labour's plans, Mr Emmerson said: "Clearly one risk with Brexit is investment falls within the UK economy and clearly it may mean that it's not the time to put up corporation tax significantly.

"It may be that is a particularly risky thing to do at that moment in time."

Turning to the Tory manifesto, Mr Emmerson dismissed Prime Minister Theresa May's proposals to means-test winter fuel payments for the elderly and scrap the pensions triple lock as making "wholly trivial" savings.

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

He said: "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.

"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 Tory commitment to get net migration down to the "tens of thousands" risked causing "considerable economic damage", particularly when coupled with the ageing British population, he said.

The Office for Budget Responsibility has already downgraded its forecasts for tax receipts by £6 billion in 2020-21 - and rising thereafter - due to lower expected net immigration .

Mr Corbyn, informed that the IFS believes Labour's plans would result in the highest-ever level of peacetime taxation, replied to Mr Neil: "Well, they're not correct on that actually because the level of corporation tax we're proposing to go to would be 26% which is actually less than it was in 2010."

Told the IFS was talking about the overall level of taxation, Mr Corbyn said: "I dispute that figure actually, but okay, we'll have that debate with the IFS."

Shadow chancellor John McDonnell said in an article for the LabourList website: "Even allowing for the IFS's less generous estimate of the amounts that can be raised from taxing the 5% and the corporations, their analysis shows that Labour's plans are fiscally sound.

"In their estimate, the next Labour government would be on course to both rapidly shrink the deficit on day-to-day spending, and leave the country with a lower debt burden at the end of the next parliament than at its start."

Mr McDonnell added: " We don't agree with those who say that it is not possible to tax the super-rich or corporations. We know it is harder than squeezing ordinary households.

"It may be easier for the Tories to tax ordinary working people through stealth taxes - like the shocking rise in cremation and burial fees - and let their big business backers off the hook, but Labour won't duck out of taking on the tax dodgers.

"That's why we presented a comprehensive tax transparency and enforcement programme, backed up by extra funding for HMRC after years of self-defeating Tory cuts."

Popular

From Belfast Telegraph