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Osborne: Vote 'Brexit', Get Tax Hikes

by Robert Lee,, London

16 June 2016

UK Chancellor George Osborne has warned that leaving the European Union (EU) would result in a GBP30bn (USD42.5bn) a year "black hole" that would "require sharp and difficult tax rises" to fill.

Speaking at an event with his predecessor Alistair Darling, Osborne outlined the "difficult decisions that would have to be made to stabilize the British economy if Britain quits the EU." He said that he would need to introduce an emergency budget that both raises tax and cuts spending.

According to Osborne, "The sorts of tax rises we could see include: a 2p rise in the basic rate of income tax, to 22 percent; a 3p rise in the higher rate, to 43 percent; five percent increases in duties on alcohol; [and] a five percent increase in the basic rate of inheritance tax, to 45 percent."

Osborne further cautioned that "these big tax rises only fill half the hole in the nation's finances."

Alistair Darling, the former Labour Chancellor, then explained the spending cuts that would be needed in a Brexit scenario. He said: "You'd have to consider cutting NHS, education, and defense spending by two percent in real terms. That means a GBP2.5bn a year cut to the health service: fewer staff, fewer operations, poorer care. There would be GBP2bn to find from the pensions budget. Spending in other areas – like the Home Office, transport, and local government – would take a five percent cut, saving GBP5.8bn."

The Vote Leave campaign was quick to respond. 57 Conservative MPs rejected the proposed "emergency budget" in a joint statement. They accused the Chancellor of "a blatant attempt to talk down the market and the country," and said Osborne would not have sufficient parliamentary support to push through the measures.

The Labour Party, which is supporting the Vote In campaign, has also said that it would not support the "emergency budget."

TAGS: inheritance tax | tax | pensions | budget | United Kingdom | education | tax rates | tax reform | individual income tax | European Union (EU) | Europe

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