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UK faces ‘crippling’ tax rises to fund pension and care costs

The UK faces “crippling” tax rises to fund future pension and social care contributions, the Institute of Economic Affairs warns.

A new report by the think-tank, published ahead of next week’s Budget, claims total spending would need to be cut by a quarter, or health and social care expenditure by 50 per cent, to avoid future tax increases.

The IEA argues that measures being introduced to reduce the cost to the Government of the UK’s ageing population, such as raising the state pension age, are being implemented too slowly and are “inadequate”.

It says further policies should be implemented to shift the balance of responsibility for funding social protection services from the state to the individual.

“Without such reforms, the already hugely underfunded government provision of social insurance is likely to run aground,” the report argues.

IEA editorial and programme director Professor Philip Booth says: “Without reform, today’s young people are likely to be disappointed, either in terms of higher tax rates or in terms of reduced future benefits provided by government.

“The quicker the government changes policy, the more painlessly the situation will be resolved. For too long people have voted themselves benefits to be paid for by the next generation of taxpayers, not by sacrifices that they will make themselves.”

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There are 2 comments at the moment, we would love to hear your opinion too.

  1. Without wanting to be political IMHO there is little desire to make tough decisions by the Government (as the problem isn’t this Parliament’s, the next, nor the Parliament after that)… look at all the flak the Coalition have received from Labout in the current term in trying to deal with the ‘hop potato’ they were left to contend with.

    Plus there is constant media commentary as to how tax is too high, benefits are low, inequality in methods for paying for care and examples of people who feel hard done by – all of this is leading to (?led to) a society which wants to pay a little and receive a lot and will sue when they don’t get it …. which if we’re not careful will result in an environment of self provision where we can then look back and say how great it all once was.

  2. In my view it is abuse of public money by the politicians that has caused the problems that they face.
    They still managed to increase their pensions and allowances and that was acceptable it seems. The new Pension Bill will continue the denial of indexing to many thousands of ex-pats without justification. The DWP is a shambles with an unqualified leader in Iain Duncan Smith and a Pensions Minister who is condoning the discrimination that he was going to stop. Roll on 2015.

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