IFS: reforms needed alongside tax changes in budget

IFS Warns of Needed Reforms Alongside Tax Changes in Budget

The Institute for Fiscal Studies (IFS) has cautioned that rising taxes without reform could be detrimental, rather than beneficial. In a report published on October 13, the IFS outlined options for tax increases that Chancellor Rachel Reeves is considering for the Autumn Budget in November, warning against "half-baked fixes."

The report specifically highlights the potential economic damage of increasing taxes on returns to capital without accompanying reforms. This includes taxes on rental income, dividend income, interest income, self-employment profits, or capital gains.

Isaac Delestre, a senior research economist at IFS, noted that while revenue increase is likely a major goal of the upcoming Budget, "if Rachel Reeves limits her ambition to collecting more revenue, she will have fallen short."

Delestre emphasized that any package of tax rises will inevitably weigh on growth. However, he suggested that the economic damage could be mitigated by addressing inefficiencies in the tax system.

Author's summary: IFS warns tax changes must be accompanied by reforms.

Tax increases without reform could cause economic damage.
Reforms are necessary to limit economic damage from tax rises.
IFS report outlines options for tax increases in the Autumn Budget.

FTAdviser — 2025-10-13

IFS Warns of Needed Reforms Alongside Tax Changes in Budget

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