Cutting taxes would be a mistake, says IMF

While several of the candidates vying to become the next Prime Minister have promised to cut taxes, the International Monetary Fund (IMF) has warned it might be better to raise taxes instead. Mark Flanagan, who leads the IMF’s UK team, said: “I think debt-financed tax cuts at this point would be a mistake.” He warned that tax cuts could boost inflation by strengthening spending, arguing that money raised through tax could instead be used to invest in the country’s long-term future. Noting that the UK has a below-average tax ratio relative to the rest of the Organisation for Economic Co-operation and Development, he said: “At some point you have to decide, do we want to invest in the climate transition? Do we want invest in digitalisation? Do we want to invest in skills for the public. Well, if you do you need the resources to do it. And the way to realise those resources is to lift the tax ratio a little bit.”

BBC News

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