‘Brexit’ may lead to higher taxes : Research on the possible ‘Br-exit’ aftermath continues and the findings seem to be positive, negative and uncertain.
‘Brexit’ may lead to higher taxes :National Institute of Economic and Social Research
The National Institute of Economic and Social Research after recent research showed that the government would have to increase taxes due to economy shrink as a result of UK leaving the European Union which would lead to fall in migration. There is an assumption that migration from EU countries will fall compared to the Remain camp, significantly by two thirds. A fall in migration would affect significantly the public finances due to higher dependency ratio and government spending would rise requiring an increase in taxation
Institute of Fiscal Studies (IFS)
The Institute of Fiscal Studies (IFS) warns that if UK leaves that EU then the UK Government will have to hike taxes by as much as 5 billion pounds to balance its budget in 2020.The UK’s contribution to the EU is said to be about 8 billion pounds per year and should UK decide to exit the EU, then public finances will be strengthened.However, it could lead to uncertainty in the short-term and likely to make the UK less attractive to foreign direct investment. It has been nevertheless been noted that the Government is unlikely to respond with higher spending cuts and tax rises in the short-term.
Conclusion
It seems from research on ‘Brexit’ that there are many scenarios on the table, some to be seemingly negative on the public finances as well as the tax rates and some to be seemingly positive on other aspects.There is nothing to be certain about the possible ‘Brexit’ aftermath, however it is something that would definitely impact the European union and the economic and financial system in general.
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