The UK government is likely to raise taxes in the upcoming Budget, according to Chancellor Rachel Reeves. The government has denied Labour claims that the previous government left behind a hole of £22bn ($31.4bn) in the public finances. Speaking on the News Agents podcast, Reeves said that inheritance tax, capital gains tax, and pension reform could be increased, although VAT, national insurance, and income tax would remain unchanged. She clarified that Labour wants to stick to “sensible” regulations aimed at reducing the government’s long-term debts. Reeves’ statements follow the announcement of the winter fuel allowance’s means-testing and a cancellation of infrastructure plans.
Reeves’ comments were met with objections from shadow chancellor Jeremy Hunt. The Conservatives have accused Labour of being responsible for emptying the public purse, but Reeves claims that the previous government failed to disclose their spending, forcing her to make cuts in other areas. The Institute for Fiscal Studies (IFS) supports Labour’s claims, acknowledging that £6.4bn of the spending shortfall was on the asylum system, including the Rwanda deportation scheme.
Reeves has already revealed some tax increases, including a VAT on private school fees, while past announcements have referred to difficult decisions. Liberal Democrat Treasury spokesperson Sarah Olney is now demanding that large companies pay their fair share. The UK government has to address a significant shortfall in finances left over by the previous government, and raising taxes appears to be the only way to address the issues.
While Labour insists that there will be no tax increases for working people, the Conservatives have repeatedly claimed that Labour would escalate taxes. Brexit and the ongoing pandemic will have exacerbated financial concerns, and the government will need to face harsh choices to rectify the deficit. There is no official information on where the tax increase will be implemented. However, Reeves’ clarification excludes national insurance, income tax, and VAT, keeping hope alive for many middle-class working individuals
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