Government may have to impose £50bn tax rise - papers

Economists are warning the new coalition Government may have to impose £50bn of tax rises only months into its tenancy, including a hike in VAT.

They now view it as an odds-on probability the coalition will raise VAT to 20% within 18 months, according the panel of economists regularly consulted by the Treasury. However, others warn the VAT increase may be able to raise barely more than a fifth of the revenues required, the Daily Telegraph reports. Jonathan Loynes of Capital Economics warned the Office for Budget Responsibility, the three-man independent committee charged with assessing how much to cut the deficit, could urge the Government to raise taxes by £50bn. This implies a 9.5p increase in the basic rate of income tax wo...