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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 report by the thinktank, published last week, 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 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 responsibility for funding social protection services from the state to the individual, adding that “without such reforms, the hugely underfunded government provision of social insurance is likely to run aground.”

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.

“For too long people have voted themselves benefits to be paid for by the next generation of taxpayers, not by sacrifices they will make themselves.”

Informed Choice managing director Martin Bamford says: “Neither raising taxes or cutting health spending by 50 per cent are going to be on the agenda going into a general election.

“But ultimately the IEA is right because the population is getting older. The most likely outcome will be a combination of spending cuts and tax rises over the long-term.”


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  1. “For too long people have voted themselves benefits to be paid for by the next generation of taxpayers, not by sacrifices they will make themselves.” the article says which begs the question “Why did the government reduce the qualifying period to 30 yrs and then increase to 35 yrs when the previous period OF would garner more income ?” I think that I paid for 46 yrs as I do not remember this not being deducted from my wages. The government try to blind us with mixing benefits and pensions together but surely the state pension is paid for from National Insurance contributions from both employee and employer. Therefore the state pension should be unaffected. In the case of the frozen pensioner – ex-pats who live in certain countries (mainly Commonwealth) get no indexation once reaching retirement if already abroad or if emigrating on retirement to one of these countries where the government discriminately freeze the pension . Benefits are a separate kettle of fish and yes they cannot continue to give freebie handouts to people without good reason as they appear to be doing today. I read that there were 620,000 immigrants to the UK last year which is costing a great deal should they all be receiving cash for no work. There has to be some control and soon.

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