Brexit: George Osborne warns of massive tax hikes if Britain leaves the EU

Warning: George Osborne said an emergency budget would have to be introduced
Ben Birchall/PA Wire
Hannah Al-Othman15 June 2016
WEST END FINAL

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George Osborne has warned that Britain will be faced with tax hikes and spending cuts of £30 billion in the form of an emergency "Brexit Budget" if the country votes to quit the EU.

The Chancellor and former Labour chancellor Alistair Darling are insisting schools, hospitals and the armed forces would all see funding slashed if the Leave side win on June 23.

The basic rate of income tax would increase by 10 per cent, climbing to 22p in the pound, the top rate would rise 3p to 43p, and inheritance tax would go up 5p to 45p in the pound, to plug a predicted £30 billion "black hole" in national finances triggered by Brexit, Mr Osborne has said.

The NHS would also see cuts of £2.5 billion, with the defence budget reduced by £1.2 billion, and education spending down by £1.15 billion, the Chancellor warned as he gives "illustrative examples" of what would be in an emergency Budget.

The Chancellor is saying the emergency Budget figures are based on mid-range forecasts by the Institute for Fiscal Studies of the likely economic impact of Brexit.

Spending on pensions could also be cut by £2 billion, with the Home Office, transport, and local government taking a £5.8 billion hit, and alcohol and petrol duties surging by 5 per cent, Mr Osborne is claiming.

However, Brexit-supporting Tory MPs have threatened to vote down the emergency budget, in a serious escalation in the Conservative civil war over the EU.

Some 57 MPs have signed the letter saying they would oppose the budget, with former Defence Secretary Liam Fox saying voters "will not forgive" the Chancellor if he "threatens to inflict a punishment Budget" on them if they vote to leave the EU.

Mr Osborne said: "Quitting the EU would hit investment, hurt families and harm the British economy. As Chancellor, I would have a responsibility to try to restore stability to the public finances and that would mean an emergency Budget where we would have to increase taxes and cut spending.

"Far from freeing up money to spend on public services as the Leave campaign would like you to believe, quitting the EU would mean less money. Billions less. It's a lose-lose situation for British families and we shouldn't risk it."

Mr Darling, who ran the Treasury during the economic crash, added: "I am even more worried now than I was in 2008. We know we'll have not just a short period of uncertainty - but years and years of it. Far from having more to spend on public services - the giant con trick at the heart of the Leave campaign - we'd have tens of billions of pounds less."

As the Remain side tries to force the debate back on to the economy, Labour leader Jeremy Corbyn has strongly defended the free movement of workers within the EU, despite the party's deputy leader Tom Watson indicating migration rules could be changed.

Remain's once double-digit lead over Leave has been cut to one point, according to a ComRes survey for The Sun which puts In on 46 per cent and Out on 45 per cent.

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