Brown Rejects IMF Call For UK To Raise More In Tax

by Jason Gorringe, Tax-News.com, London

10 March 2005

British Finance Minister Gordon Brown has rejected the conclusion of an IMF assessment into the UK economy that taxes will need to rise in order for the Chancellor to meet his fiscal objectives.

Whilst the IMF’s Article IV review praised Mr Brown’s “skilful macroeconomic management,” the fund’s directors noted that the public finances have “deteriorated sharply,” necessitating either a widening of the tax base, an increase in tax rates or a cut in public spending.

The IMF assessment has added to a growing body of economic opinion that the Chancellor has got his sums wrong and will need to put up taxes in order to meet his public spending commitments.

However, Brown was forthright in his dismissal of the IMF analysis, pointing out to his detractors that the level of government debt in the UK is well below the average for the world’s industrialised nations.

"Debt in the UK is well below the 40% of gross domestic product ceiling we set in our fiscal rules, lower than all the major industrial countries," the Chancellor was reported as saying this week.

"It is right for Britain to reject any proposals that would cut investment in our infrastructure and public services, whether these proposals come from the European Commission, the IMF or any other quarters," he argued.

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