Higher taxes for the wealthy will be ‘part of the story’, says Reeves ahead of Budget
Rachel Reeves has suggested that higher taxes on the wealthy will be part of next month’s budget.
The Chancellor was speaking in Washington on Wednesday and acknowledged he was looking at potential tax rises and spending cuts to fill the gap in his budget, which he said was partly due to the ongoing impact of Brexit.
It comes amid speculation about the measures he will take to fill the estimated £50 million black hole; These ideas include a cut to the cash ISA allowance for savers.
Ms Reeves, who is in the US for an International Monetary Fund (IMF) meeting, said when asked whether her statement on November 26 would include higher taxes on the rich: “That will be part of the story.”
“There will be no return to austerity in next month’s budget. We know we are now facing a changing global environment for the economy.”
He also said that the decisions he made last year were fear-mongering that hurt the pockets of the rich.
He said: “Last year, when we announced things like non-doms, private equity (tax increase), VAT on private school fees, there was so much bleating that they wouldn’t be able to raise the money, people would leave.
“The Office for Budget Responsibility will release updated numbers on all of this. And that fear-mongering hasn’t worked because this is a great country and people want to live here,” he said.
The budget is expected to include spending cuts and tax rises, and he attributed this to the “serious and prolonged” impact of Brexit on the economy.
With no boom in economic growth, stubbornly high inflation and the rising cost of government debt, Ms Reeves will have to fill a black hole estimated by some economists at around £50bn.
On Wednesday Labor vowed to stand by its pre-election promise not to increase VAT, income tax or national insurance payments.
“Of course we are looking at taxes and spending,” he told Sky News before leaving for the US.
He confirmed the budget watchdog had “consistently overestimated” the UK’s productivity and said the expected downgrade on previous assumptions would likely make Ms Reeves’ task even more difficult.
Asked if she was in a “doomsday cycle” in which she would have to continually raise taxes to fill a black hole, Ms. Reeves said she would not use those words but said “nobody wants this cycle to end more than I do.”
He said: “Challenges such as geopolitical uncertainties, worldwide conflicts, rising tariffs and barriers to trade are looming ahead of us and now this review looks at how productive our economy has been in the past and projects this going forward.
“But I will not shy away from these challenges. Of course we also look at tax and spending, but as Chancellor the numbers will always be relevant to me because just three years ago we saw inflation and interest rates skyrocket from a government where the Conservatives lost control of the public finances.”
He said reforms to the planning system would help “return building in Britain”.
