In a budget plan on Thursday, British Finance Minister Jeremy Hunt proposed a number of tax rises and tighter public spending. Hunt claimed the economy is already in a recession and is likely to contract the following year as a result of inflation that is expected to average 9% this year and 4% in 2024. Hunt outlined a 55 billion-pound plan to address the public finances, almost half of which will come from tax increases.
At the end of its five-year prediction period, the tax burden will rise from 33.1% in the 2019—20 tax year to 37.1% of GDP, its highest sustained level since World War Two, according to the OBR. He told parliamentarians that “credibility cannot be taken for granted” and that “today’s inflation data demonstrate that we must continue a relentless struggle to bring it down, including a crucial commitment to repair the public finances.”
Hunt outlined reforms that will increase the number of people paying basic and higher-rate income taxes. He also decreased the cap on who must pay the top 45 percent rate to 125,000 pounds and reduced the amount of dividend income that is tax-free. From January 1 through 2028, a tax on the earnings of energy businesses would increase to 35% from 25%, and an additional temporary tax of 45% will be placed on electricity generators, according to Hunt. According to him, public spending would increase overall even if it would grow more slowly than the economy.
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