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The UK’s Chancellor of the Exchequer, Rachel Reeves, has confirmed that she will not be “coming back with another load of tax rises” to fund public services over the next few years. Last week, Reeves appeared at a business conference and said that there would not be any tax hikes as Labour’s Budget would “put our public finances back on a firm footing”. However, the Conservatives accused her of undermining business confidence by failing to offer a stable message to firms. This came after the Chancellor announced a rise in employers’ National Insurance (NI) in October’s Budget.
The NI rise means that, from next April, employers will have to pay NI at 15% on salaries above £5,000, rather than the present 13.8% on salaries above £9,100. Ministers defended the hike, saying it is necessary to fund public services and to address a hole in public spending plans. However, opposition parties argue that the increase will result in less economic growth and discourage companies from hiring workers.
Reeves later said she wanted to increase revenue for public services “all at once” to provide businesses with confidence that further taxes will not be required in future years. Business Secretary Jonathan Reynolds gave a vaguer commitment that he would not repeat “comparable” rises in business tax. In Parliament, during the Treasury committee’s regular scrutiny session, Conservatives called on Reeves to repeat her pledge not to raise taxes, which she again declined to do. Shadow Treasury Minister Richard Fuller criticised her for being unable to “repeat her own words.”
However, at a conference in Hull for northern business leaders, Reeves confirmed that she would not be “coming back with another load of tax rises or indeed higher borrowing” to fund public services. Reeves, who earlier informed business leaders that she could not “write five years’ worth of budgets in just five months”, suggested that economic shocks could still happen in the future
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