The National Institute for Economic and Social Research (NIESR) has warned that the British government may have to increase income tax by 7p if it wants to get national debt back under control.
According to a new report by NIESR, debt in the UK could skyrocket to 83 per cent of national income by 2015 if action is not taken now.
The organisation claimed the increase would be a considerable "burden for our descendants".
However, NIESR said similar increases in revenue could be achieved by broadening the remit of VAT or implementing a five-year public sector pay freeze.
"Fiscal consolidation will be expensive, but the faster it happens the lower the rise in debt," the report said.
This week the Times claimed that high earners in the UK are increasingly setting up their own companies to reduce the amount of income tax they pay on their salaries.
However, Mike Warburton, an
accountant at Grant Thornton, told the news provider that many high-earners will have a tough time proving they are self employed.
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