A new health and social care levy could almost be trebled, just as families face a huge squeeze on their finances, a major report has warned.
Households may have to fork out another £19billion in the coming years to meet the needs of caring for an ageing population, experts predicted.
The grim forecast means Britain’s tax burden, which will already be at an historic high, could balloon even further.
The tax rises come as families face a surge in the cost of living, with the IFS warning inflation could approach 5 per cent
The Government’s new levy, which was introduced this year, will add a 1.25 percentage-point surcharge to national insurance contributions from next April.
But the Institute for Fiscal Studies (IFS) said that to meet the sector’s needs, the tax rise could hit 3.15 percentage points by the end of the decade.
For someone earning £30,000 a year, who will already have to pay an extra £255 on their national insurance bill from next year, their extra payments would hit £643 per year by the end of the decade.
And for someone earning £50,000, who is currently facing an increase of £505, this would jump to £1,273.
The tax rises come as families face a surge in the cost of living, with the IFS warning inflation could approach 5 per cent.
Even then, the cash available for local government, further education, courts and prisons will be eaten away as the Chancellor attempts to get borrowing under control.
Paul Johnson, director of the IFS, said: ‘Rishi Sunak, a Conservative Chancellor, is presiding over an increase in the tax burden to record levels in the UK, and an increase in the size of the state to levels not seen since the days of Mrs Thatcher.’ The gloomy predictions come as Britain faces an uphill battle to get its finances in order.
Mr Sunak could overturn some of the tax rises he doled out in his March Budget
Investment bank Citi, which collaborated with the IFS on its data, forecasts that output will grow by 6.9 per cent this year and 5 per cent next year, after last year’s historic slump during the pandemic.
If it beats these estimates, the IFS said, Mr Sunak could overturn some of the tax rises he doled out in his March Budget.
But in a worst-case scenario the Chancellor may have to triple these increases in a move that would prove painful for households and businesses whose finances are already being stretched by rising energy bills and soaring inflation.
Mr Johnson said the Chancellor ‘will be hoping against hope that stronger-than-expected growth in revenues over the next few years will help to dig him out of what still looks like a fair-sized hole’.
An ever-growing and ageing population had intensified pressure on the public purse even before the pandemic, as state pensions and the NHS have swallowed increasingly large amounts of money.