Rachel Reeves ‘considering breaking Labour manifesto pledge with income tax raid’
Rachel Reeves is reportedly considering increasing income tax in next month’s Budget in what would be a major break with one of Labour’s main manifesto promises.
There are resources said Guard He said he could raise income tax to plug the gap in the public finances, estimated to be between £30bn and £50bn.
The newspaper reported that the Chancellor was “nervous” about breaking such a big commitment, but some advisers at the Treasury and Number 10 believe it may be the only way to raise enough money to ensure he does not have to raise taxes again in this parliament.
Before the election, the Labor Party promised that there would be no tax increase for employees.
But a source said the Treasury was considering adding 1p to the key interest rate, which would raise more than £8bn. Another believes it will likely raise higher or additional interest rates; this would bring in smaller sums of £2bn and £230m, at rates starting from around £50,000 and £125,000 a year.
A senior official said discussions were ongoing about how much headroom Ms Reeves wanted to give herself, with some wanting more than the £10bn she announced in her spring statement.
“There’s a very lively debate going on right now among those planning the budget about how bold we want to be,” the source said. Guard.
“Nobody wants it to be £10bn again but there is an argument for us to go much higher which would mean we wouldn’t have to go back and do it again and we could have the space to cut taxes before the budget.
“But if we continue down this path, we’re more likely to have to raise income taxes; that’s the debate that’s going on right now.”
Treasury spokesman told Independent: “We do not comment on speculation regarding tax changes.”
Asked earlier this month about the possibility of raising income tax, Ms. Reeves said she stood by “the commitments we made in the manifesto for a reason.”
“Because in the last Parliament workers had the worst living standards in the whole Parliament. But what is worse is that at the end of the last Parliament living standards were lower than they were at the beginning,” he said.
It was reported on Wednesday that lawyers, GPs and accountants will face higher taxes and fees will be charged to workers using limited liability partnerships (LLPs) to raise £2bn.
According to Money.co.uk, there are 355,760 partnerships in the UK, of which 86,030 are employees. Partnerships do not pay 15 per cent of the employer’s national insurance rate as partners are considered self-employed. Partners also pay a lower employee national insurance rate.
Ms. Reeves is also expected to announce a “mansion tax” that would impose a capital gains tax on the sale of the most expensive homes.
Ms Reeves, who appeared to pave the way for tax rises on Tuesday, said Brexit and austerity were having a bigger impact on public finances than expected.
