Osborne tax cuts for wealthy create £32bn headache, says thinktank

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http://www.theguardian.com/politics/2016/mar/17/osborne-tax-cuts-for-wealthy-create-32bn-headache-resolution-foundation

Resolution Foundation says ‘misguided’ cuts have turned goal of budget surplus by 2020 into a Herculean task

Osborne tax cuts for wealthy create £32bn headache, says thinktank
Phillip Inman
Thursday 17 March 2016 07.29 EDT

George Osborne’s latest tax cuts for the wealthy will leave him with a Herculean task of reducing borrowing by £32bn to meet his budget surplus rule in 2019-20, according to the Resolution Foundation.

A string of giveaways in the next couple of years will increase government borrowing above his previous forecasts and force him to find £32bn of tax rises and spending cuts in the last year of the parliament.

The thinktank said the decision to offer tax cuts to wealthier groups in the form of higher tax thresholds and lower capital gains tax was “misguided” when official forecasts showed there was a £56bn gap in the government’s finances.

“By increasing spending through expensive and poorly targeted tax cuts, the chancellor has created a Herculean task of reducing borrowing by £32bn in a pre-election year. It is hard to see a government seeking to build a pre-election feelgood factor delivering a consolidation comparable to that seen during the chancellor’s first two years in office.