Chancellor George Osborne and former chancellor Alistair Darling today warned of an income tax hike for both lower and higher rates if Britain votes to leave the European Union.
Tax hikes which would be considered include a 2p rise in the basic income tax, to 22%; and a 3p rise in the higher rate, to 43%.
Speaking at Hitachi’s train maintenance centre in Ashford, Kent, the chancellor said the measures would be announced in an emergency budget in the event of a leave vote.
The government would “almost certainly” have to both raise taxes and cut spending to help fill the forecast £30bn public spending gap if Britain leaves the EU, he added.
It comes after multiple large corporates, including Japan’s Hitachi, Fujitsu and Nissan, warned that Brexit could deter further investment in the UK.
“Quitting the EU would hit investment, hurt families and harm the British economy,” Osborne told the audience at Hitachi today.
“As the chairman of your firm here, Hitachi, has said ‘take away the UK’s membership of the EU, and the future investment case looks very different’.”
Darling said Brexit would create a “profound economic shock” and would deter investment from international companies who see Britain as the gateway to Europe.
The impact the possibility of Brexit had already had on the economy proved how damaging a vote leave would be for the country, he added.
“Investment decisions are on hold. Almost £100bn has been wiped off the FTSE in recent days. And, for the first time ever, we saw long-term German government bonds offering a negative yield – in other words, investors are paying Germany to look after their money as they seek safe havens.”
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