£2.5 billion tax hike needed to balance budget

Chancellor Gordon Brown will need to raise taxes by a further £2.5 billion to balance the public books over the economic cycle, according to the latest Green Budget by the Institute for Fiscal Studies (IFS).

The report, compiled in association with Morgan Stanley, says the Treasury is wrong to expect that higher revenues from existing taxes, combined with planned cuts in public spending, will swing the budget balance from a deficit of 0.9% of national income in 2005'06 to a surplus of 0.8% over the next five years.

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