If you believe thesmoke signals from the Treasury– and you probably should – the Budget on 17 November will have to include big increases in tax in order to plug a ‘black hole’ in the public finances. But is it inevitable that taxes will have to rise and, if so, what’s the best way to do it?
The obvious starting point is the ‘black hole’ itself. Different numbers are regularly tossed about here, with recent estimates ranging from around £30 billion to more than £70 billion. However, few people understand what these mean. The size of the ‘black hole’ depends on two main factors.
The first is the set of fiscal rules against which the public finances are assessed. The ‘black hole’ is the difference between the forecast path for public sector borrowing on current policies and where borrowing needs to be to hit the government’s targets. The…
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Utopia, you are standing in it! 
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