The 14 billion pounds sterling hole in the public purse

Article Abstract:

The current plan of the UK's Conservative government to reduce the budget deficit to 19.2 billion by 1997/1998, to which a future Labour government would also be committed, will not be sufficient to keep interest payments on government debt under control, according to research from the National Institute of Economic and Social Research which is to be published in Mar 1997. The next government will have to reduce spending or increase taxes by as much as 14 billion pounds sterling. The current aim of reducing government borrowing gradually to nothing is not feasible.

Economic aspects

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PSBR surprise boosts scope for tax cuts

Article Abstract:

The UK government's finances were in surplus by twice as much as financial analysts had expected in Oct 1996, following a sharp rise in receipts from corporation tax and value-added tax. The government was able to make a 4.4 billion pounds sterling debt repayment, and it now seems likely that the public sector borrowing requirement for the current financial year will be around the 26.9 billion pounds sterling predicted by the Treasury. The more favourable financial position will give chancellor Kenneth Clarke scope to make tax cuts in the forthcoming Budget.

Finance, Public sector

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Why squeezing the rich helps poll ratings more than the Exchequer

Article Abstract:

UK Chancellor Gordon Brown is expected to include measures against tax avoidance in his forthcoming 1998 Budget. It is certainly justified to claim that the rich should be made to pay all the taxes for which they are theoretically eligible. However, closing tax loopholes could also have the effect of discouraging entrepreneurship, which would have a negative impact on the economy. It would also be a negative move to impose a consumption tax on status goods, as this would cut sales of luxury items, some of which are made in the UK.

Public Finance Activities, Corporate Taxes-Savings Incentives, Column, Tax incentives

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