As the election approaches, the tax debate is hotting up. The government has been rejecting claims by many independent commentators that taxes
may soon have to rise again, while the Conservatives have been trying to demonstrate that they would be able to redce them.
Much hinges on the Chancellor's rules restricting how much the Government is able to borrow. These are the sustainable investment rule and the, at present, more constraining golden rule. Both
have to be met over the course of an economic cycle. The Treasury believes that the current cycle will end in Spring 2006. Whether the rules are met or not over the this period will be important for the Chancellor's pride, but whether
they are on course to be met over the next cycle is more important for the future path of taxes.
Authors
Carl Emmerson
Carl, a Deputy Director, is an editor of the IFS Green Budget, is expert on the UK pension system and sits on the Social Security Advisory Committee.
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