London (CNN Business)UK Prime Minister Boris Johnson’s plan to hike payroll taxes to raise billions in funding for health and social care will raise Britain’s tax burden to its highest ever level, according to the Institute for Fiscal Studies.
The independent research organization also said that further tax hikes could be on the cards, resulting in a permanent increase in the size of the British state and squeezing workers and businesses still recovering from the pandemic.
“Both [government] spending and tax will ratchet upwards over the next few years,” the IFS said in research published after Johnson’s announcement Tuesday, which broke a 2019 election promise not to hike income tax or national insurance.
“Taxes will reach their highest sustained level in the UK. This was always going to be an inevitable consequence of ever-growing demands on health and social care, and would have happened eventually irrespective of the pandemic,” it added.
The tax increases come just six months after finance minister Rishi Sunak delivered Britain’s biggest tax-raising budget in nearly three decades, lifting the rates of both corporate and personal income taxes.
The latest changes will push taxes to their highest-ever sustained share of the UK economy, according to IFS research economist, Isabel Stockton, meaning that workers and businesses will be paying more of their income in taxes than ever before.
