Government debt levels fall

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Government borrowing fell in April Office for National Statistics (ONS) data show borrowing fell in April compared with the same month last year, as parts of the economy reopened after lockdown measures eased, driving tax receipts up 7%. Official figures show borrowing was £31.7bn - significantly lower than the deficit of £47.3bn in April 2020 and £7bn less than expected. The ONS now estimates that the Government borrowed a total of £300.3bn in the financial year to March. Although down slightly from its previous estimate of £303.1bn, it remains the highest level since the end of World War Two. Ruth Gregory, senior UK economist at Capital Economics, commented: "April's public finances figures showed that the Government's financial position isn't as bad as the OBR predicted only two months ago, reinforcing our view that the tax hikes and spending cuts that most fear may be avoided.” Julian Jessop, an economist at the Institute of Economic Affairs, agreed, stating that planned hikes in corporation taxes should now be abandoned. Alternatively, some of the time-limited Covid tax cuts should be made permanent, “including the additional tax breaks for business investment.” We've been long time advocates of tax cuts - many economic studies have shown that high tax burdens stiffle economuc development. Lower tax rates tend to result in more tax revenue for the Government as fewer people try to avoid taxes.

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