Capital Economics says new PM may move away from recent trend of increasing the burden on businesses and focus instead on capital, wealth and income.
“This tax-raising budget may be almost as big as the last, but with the balance tilted away from hikes on businesses seen in recent years towards tax hikes on capital, wealth and income,” Ruth Gregory, deputy chief UK economist at Capital Economics, said.
“Some of the PM’s more ambitious pledges may be delayed beyond this year’s budget,” she wrote in a research note. “If spending is to rise (perhaps by up to £30-40 billion) taxes will need to rise too (perhaps up to £20-25 billion).”
Gregory said that Burnham may choose to delay some of the tax rises to avoid a large single hit to households’ real incomes.
She estimated that if taxes were to rise by £25 billion, equal to about 0.8 per cent of GDP, then the tax burden would rise to a new high of 39 per cent of GDP.