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UK Chancellor to Plug £30bn Budget Gap With Windfall Tax on Banks and 'Sin Taxes'

Get ready for a windfall tax on banks and higher 'sin taxes'. Economists predict more tax hikes to come, affecting businesses and high-income individuals.

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In this image we can see sheds, transformers, electric poles, electric cables, fences, street pole, street light, trees and sky with clouds.

UK Chancellor to Plug £30bn Budget Gap With Windfall Tax on Banks and 'Sin Taxes'

The UK's Chancellor is set to bridge a £30bn fiscal chasm in the autumn Budget with a windfall tax on banks and higher 'sin taxes', anticipated to generate £8bn. Economists caution of further tax hikes, with possible measures including extending tax freezes and introducing new National Insurance Contributions (NICs) rates, which could yield an extra £15bn.

Last year's NICs rate increase significantly added to the costs of major employers in sectors like retail and hospitality. Despite Labour's manifesto commitments, making main tax rate increases unlikely, the Chancellor may still need to explore alternative revenue streams to balance the books. Changes to pension tax treatment could potentially bring in an additional £5bn. Michael Saunders, Senior Advisor at Oxford Economics, anticipates large corporations and high-income individuals to face increased tax burdens to maintain the government's financial framework.

The Chancellor's tax hikes and spending restraint are vital in enhancing the UK's fiscal outlook. The productivity forecasts of the UK's fiscal watchdog will significantly influence the country's fiscal prospects. The forthcoming autumn Budget is expected to provide more clarity on the government's plans to address the £30bn fiscal black hole.

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