There’s a warning that the Department for Transport may be in line for cuts in the future because the tax rises in the budget will not raise as much as forecast.
The Institute for Fiscal Studies analysis says the increase employer national insurance contributions announced on Wednesday will not raise “anything like” the £25 billion suggested by the Chancellor.
The Telegraph quotes Paul Johnson, director of the IFS as saying the jobs tax raid will result in lower wages, reducing the amount of revenue raised from employer National Insurance contributions and these lower wages will also reduce the amount of tax collected from employee National Insurance contributions and income tax.
It says this means that the Government will raise only £10bn after accounting for lower pay awards and its decision to shield public sector workers.
Mr Johnson told the paper he thinks this means that Labour will need to find an extra £9 billion, or it’ll mean cutting spending on unprotected departments such as transport and the environment.
(Picture – Yay Images)
