Brace for the highest taxes in 325 YEARS: Grim chart shows how Reeves could heap pain on Britain with fears of ‘war on motorists’ – as poll shows public would prefer spending cuts
Rachel Reeves is set to impose the highest ever tax on Britain; According to the survey, it was revealed that the public preferred to cut spending.
Records going back more than 300 years reveal the state’s relentless expansion and how the Chancellor could take that burden to new heights.
In March, the Treasury’s OBR watchdog predicted the tax-to-GDP ratio would rise to 37.7 per cent in 2027-28, before falling slightly.
But Ms Reeves yesterday effectively confirmed that the Budget on November 26 will raise taxes again. Some believe he may need a package on the same scale as last year, generating more than £40bn.
This would potentially leave a burden of close to 39 percent of GDP by the end of the decade. Although the methodology has changed over time and the forecasts will be updated this month, the OBR’s historical figures show this level has never been seen before.
Ms Reeves broke with tradition by increasing her Budget in a speech to Downing Street in the early hours of yesterday morning.
He has made clear that he intends to take the country back to the 1970s by implementing the first increase in the basic income tax rate since Labor’s predecessor Denis Healey.
Ms Reeves insisted ‘we all must contribute’ to narrowing the gap, brushing aside a list of factors to blame, including Brexit, the Tories, Covid, the Ukraine war and President Trump’s tariffs.
Such a move would be a flagrant breach of Labour’s manifesto pledge not to increase income tax, National Insurance or VAT, and would trigger Tory calls for him to be sacked.
But Ms Reeves said she ‘will not walk away because the situation is difficult’.
Other grave developments today:
- There are claims that Ms Reeves will declare war on motorists by scrapping the 5p discount on fuel duty;
- A YouGov poll found that the public favored spending cuts over tax rises as a way to improve public finances by a margin of 43 per cent to 31 per cent;
- A leading think tank has warned Ms Reeves may need to raise £60bn from the Budget; This is much more than other estimates;
- Labor benches are extremely nervous about the Budget moves, with leftists demanding that only the ‘rich’ face higher taxes.
Rachel Reeves yesterday effectively confirmed that the Budget on 26 November will raise taxes again
Speaking in the Downing Street media room yesterday, the Chancellor hinted at broad-based tax rises affecting millions of people, saying ‘each of us must do our bit’.
He added: ‘If we are to build Britain’s future together, we will all need to contribute to the effort.’
Ms Reeves acknowledged that cutting spending rather than raising taxes was ‘a different way’. But he rejected the idea, saying: ‘The reason our productivity is so low is because governments have been doing this for the last 14 years.’
Asked whether it was important for Labor to keep the promises made in its tax manifesto, he said: ‘It is important for people to be honest. ‘Everyone can see that this year has thrown many more challenges our way.’
Ms Reeves later denied she would be forced to resign if she breached the Labor Party manifesto.
Today’s report from the National Institute for Economic and Social Research (NIESR) suggested the Chancellor could be facing a £20bn to £30bn black hole.
On top of this, it needs to create ‘headroom’ of £30bn to reduce debt and provide a fiscal buffer against future economic shocks.
The think tank warned that without a credible plan to repair the public finances, Ms Reeves could be in danger of facing a ‘Liz Truss moment’ – a bond market sell-off reminiscent of the aftermath of the 2022 mini-budget.
Labor MPs hit back at Ms Reeves, insisting she should not try to raise more money from ‘working class’ people
NIESR said the scale of the money needed could mean the basic income tax rate of 20 pence could be increased by a further 2 pence per pound, raising £20 billion, and a rise of 5 pence to 10 pence to a higher rate of 40 pence could be increased by £10 billion, by 5 pence.
A potential 5p more in the ‘additional rate’ band, charged at 45p per pound for income over £125,140, would raise £500m.
But there were warnings, including from the Tony Blair Institute (TBI), that tax increases risked sending Britain into a ‘doomsday loop’.
The worry is that higher taxes will hurt growth, which will damage public finances and mean taxes will have to rise again.
