The suggestion has been made so that the public sector debt is kept under the self-imposed limit the government has set itself, this aim also ties in with the plans by the Treasury to improve public finances over the next five years.
So why is the tax increase needed? Well the government has set itself a limit on debt to 40% of national income in 2009, without tax rises then it would mean the government would need to borrow ¡ê40bn this year and the next. The government seems optimistic in the face of this matter saying that the economy will slow and the bad news is only temporary.
How does this affect us personally then? Well tax rises are likely to further people¡¯s debt woes, the problems caused by (partially) nationalising failing bank, Northern Rock means that an extra ¡ê100bn of national income will end up being spent on public sector debt. People with debt problems have expressed worry that with more money going on taxes that their own debts will be tougher to pay off. Many debt management solutions organisations are preparing for more cases to surface in the light of extra taxation.
Whilst repaying public sector debt is spread amongst the masses via taxes if you are suffering from debt problems of your own then it is important to get help as soon as possible, many debt problems can be managed and repaid very quickly if the person with the debt seeks help as soon as possible. There are many debt management solutions on offer and some can help get debts with multiple creditors under control such as debt consolidation loans.