UK Government Study: Brexit to Cost Taxpayers Thousands
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A new study by the UK government argues families in the country will pay £4,300 ($6,185) more in income taxes if the country leaves the EU. After an aggressive charm offensive to urge British voters to vote to stay in the EU, the country’s Treasury released a study saying that Brits would be “worse off by £4,300 a year per household if Britain votes to leave European Union,” according to the Treasury.
A new study by the UK government argues families in the country will pay £4,300 ($6,185) more in income taxes if the country leaves the EU. After an aggressive charm offensive to urge British voters to vote to stay in the EU, the country’s Treasury released a study saying that Brits would be “worse off by £4,300 a year per household if Britain votes to leave European Union,” according to the Treasury.
Beyond the higher tax bill, a Brexit would be a disaster for the nation’s economy, according to the Treasury. “The analysis also finds that the negative impact on the economy (GDP) would result in a total reduction in tax receipts of £36 billion, equivalent to around an 8% increase in the basic rate of income tax,” the Treasury said.
The Treasury also downplayed Britain’s economic contribution to the EU, noting that the government pays “1p for every £1 of tax paid once the UK’s rebates and receipts are taken into account.”
Critics are quick to dismiss the study, pointing that the Treasury has made several errors in the past. For one, the Treasury failed to see the contagion from the 2011 sovereign bond crisis throughout the EU, which stunted economic growth in the UK and led much of the continent into a deep and long-lasting recession.
Critics also note that independent studies of the economic impact of the Brexit are vastly less negative. For instance, Oxford Economics, a private think-tank, published a report saying that the decline in trade between the EU and Britain would be half of the Treasury’s projections.
Grassroots groups urging Britain to leave the EU have dismissed the study, noting that its projections, which are based on historical data, fail to take into account numerous variables and macroeconomic changes that cannot be predicted.
The study is “just the latest erroneous pro-EU economic assessment published by the government over the last 40 years,” the Vote Leave party told the BBC.
That has not stopped British politicians from pleading with the public to vote to remain. George Osborne, Exchequer Chancellor of the Conservative Party, said a Brexit would be a “most extraordinary self-inflicted wound” that would make Britain “permanently poorer.”
To prove his point, Osborne cited figures from the Treasury study. “Britain would be worse off, permanently so, and to the tune of £4,300 a year for every household,” he said, adding, “it is a well-established doctrine of economic thought that greater openness and interconnectedness boosts the productive potential of our economy.”
Meanwhile, Britain’s economy has showed signs of significant weakness. A rising current account suggests weak exports from Britain, while GDP growth was just 0.6% last quarter, according to the Office of National Statistics (ONS). According to the ONS, the country’s current account balance is the lowest it has ever been in recorded history.
The ONS also saw unemployment rise to 1.7 million people in February, while earnings growth slowed to just 1.8% in the same month.
