Rachel Reeves could break Labour manifesto pledge by hiking income tax at Budget | Politics | News

Rachel Reeves could break Labor’s manifesto promise by increasing income tax in the upcoming budget. The Chancellor is reportedly in talks about abandoning his pledge not to increase taxes on “working people” as he plans to fill a black hole of up to £50bn when he announces next month.

The Treasury and some advisers in Number 10 believe that raising income tax is the only way to raise enough money to ensure it does not have to come back for more money during this Parliament. But Ms Reeves is understood to fear backlash following a National Insurance raid on employers last year. Discussions are said to center on how much headroom he wants to leave for himself, as well as his goal of balancing day-to-day expenses with tax revenues.

A source said Guard: “There is a very lively debate at the moment among those planning the Budget about how bold we want to be.

“Nobody wants it to be £10bn again, but there is an argument for us to go much higher, which would mean we don’t need to go back and do it again and we could have enough room to cut taxes before the Budget.

“But if we continue down this path, it becomes more likely that we’ll have to raise income tax; that’s the debate that’s going on right now.”

Another said: “Rachel is understandably nervous, but there is a huge desire for more space. But we need a stronger argument about our cause if we are to make the case.”

A third source added: “Either way, the politics are bad. I think the important thing is to do the right thing.”

The Chancellor suggested last week that he would target the wealthy as part of his statement on 26 November.

Ms. Reeves insisted that “those with the broadest shoulders should pay their share of the tax.”

Downing Street insisted Labour’s manifesto not to increase VAT, income tax or National Insurance remains unchanged.

Treasury was contacted for comment.