Darling needs 240 tax rise in budget shortfall

Darling needs tax rise in budget shortfall RSS Britain s No. quality newspaper website Make us your homepage Monday March Home News Sport Business Travel Jobs Motoring Telegraph TV SEARCH Our site Web SEARCH Our site Web Money home Business Your Money Executive jobs k Business search Business travel Business club Announcements Arts Blogs Comment Crossword Dating Digital Life Earth Education Expat Family Fantasy Games Fashion Features Food Drink Football Gardening Health Horoscopes My Telegraph Obituaries Promotions Property Science Sudoku Telegraph offers Weather Your Money Your view NEWS SERVICES Blackberry service Content syndication Desktop alerts Email services Home delivery Mobile Reader prints Telegraph e paper Weekly Telegraph ACTIVITY PLANNER FEATURE FOCUS Darling needs tax rise in budget shortfall By James Kirkup Toby Helm and Edmund Conway Last Updated am GMT Alistair Darling will have to raise taxes by the equivalent of per household in his Budget this week or plu! nge the country s finances perilously into the red economists warn. Budget Previews and analysis Darling to introduce year fixed mortgages HMRC ignoring rich and targeting middle class As the Chancellor prepares for his first Budget on Wednesday he is under pressure to concede that the slowing economy has left a multi billion pound shortfall in his accounts. In order to maintain Labour s spending plans he must either raise taxes or borrow more. Treasury sources have already indicated that Mr Darling is likely to use new taxes to raise money Economists expect Mr Darling to borrow as much as billion in as a slowing economy hits Government revenues. That is a billion increase on the Treasury s previous plans for the year. Although that may avert up front tax increases paying off the extra borrowing to comply with Treasury rules to balance the books over the economic cycle will ultimately need to be met by the taxpayer. Grant Thornton an accountancy firm said the cost is equal ! to for every household. There is a consensus among economic commentators that there is a black hole of unsustainable borrowing and it is this hole that will have to be filled with tax rises eventually said Maurice Fitzpatrick an economist at the firm. Grant Thornton s forecasts of a billion overshoot in borrowing are consistent with City economists projections which suggest extra borrowing of between billion and billion in the next year with further rises in the two following years. advertisement Treasury sources have already indicated that Mr Darling is likely to use new taxes on alcohol gas guzzling cars and airline flights to raise money. But an economic slowdown is likely to force the Chancellor to admit that he will still have to borrow more than he had planned. In October Mr Darling forecast growth in of two per cent to . per cent. But the Treasury s own surveys of City economists suggest growth of around . per cent and the Chancellor is likely to cut his forecast on Wednesday. A Treasury spokesman said We don t comment on Budget specula! tion. The public finances are sound and sustainable and the Government is meeting its strict fiscal rules. Philip Shaw the chief economist at Investec Securities said The Budget is likely to include downward revisions to GDP forecasts for this year and next. The gloomier outlook suggests that the Treasury s and borrowing forecasts will be raised significantly. Opponents said Gordon Brown failed to use years of strong economic growth to store up a Government surplus for the years of weaker growth now under way. George Osborne the shadow chancellor said yesterday We ve borrowed too much as a country. We ve wasted years of global economic growth and left ourselves with the worst budget deficit in Europe. There is not the room to promise huge tax cuts. We have the worst budget deficit of any major economy in the world. The criticism is echoed in a report from the Reform think tank which warns that taxes will have to rise substantially if the Government is to continue its lavish! funding of the public sector. It says that taxpayers will be stung by even higher bills in the approaching lean period in order to feed Mr Brown s unreformed bloated public sector. The Budget comes amid major concerns for the health of the American economy. Experts are united in their assessment that the country is in recession. Some fear that recession is a likely prospect for Britain. Post this story to del.icio.us Digg Newsvine NowPublic Reddit Fark BUSINESS New Kop signing Liverpool s American owners struggle as Dubai bid kicks off. TRAVEL Heaven and hell Violinist Vanessa Mae recounts her travel experiences. HEALTH Fancy some air Try an outdoor fitness programme and feel alive. ARTS Best Works of Art Go and visit the artistic wonders of the world. 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Source: http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/10/ndarling110.xml


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