Tax rises appear increasingly likely. Polly Toynbee discusses some possible tax changes, including VAT (Both left and right agree taxes must rise. Time for Labour to get creative, 12 August). My view is that a 2.5 percentage point rise in the average VAT rate is the most viable option to raise sufficient revenue without reducing growth.
Toynbee also discusses possible changes to inheritance tax and the introduction of a wealth tax. These policies may be redistributive but are unlikely to raise substantial revenue. As an example, Norway currently imposes a wealth tax that raises less than 3% of its non-petroleum tax revenue.
