UK Prime Minister Boris Johnson's plan to hike payroll taxes to raise billions in funding for health and social care will raise Britain's tax burden to its highest ever level, according to the Institute for Fiscal Studies.
The independent research organization also said that further tax hikes could be on the cards, resulting in a permanent increase in the size of the British state and squeezing workers and businesses still recovering from the pandemic."Both [government] spending and tax will ratchet upwards over the next few years," the IFS said in research published after Johnson's announcement Tuesday, which broke a 2019 election promise not to hike income tax or national insurance.
Under the plan, national insurance contributions will be increased by 1.25 percentage points for both employers and employees, amounting to a 2.5 percentage point increase on payroll taxes. According to Johnson, the highest earning 14% of the population will pay around half of the revenue raised, with 40% of small businesses and those earning less than £9,568 a year not paying anything extra at all.
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