US EditionUK’s Reeves Should Break Income Tax Promise in Budget, Think Tank Says
The National Institute of Economic and Social Research says a 3p income tax rise is less harmful than VAT or corporation tax increases to fill a £30 billion fiscal gap.
- On Friday, the National Institute of Economic and Social Research told British finance minister Rachel Reeves to consider raising income tax in next month's budget to raise $50 billion and fill a fiscal gap.
- Rising borrowing costs and dropped welfare savings have widened the shortfall, pressuring the government to raise revenues ahead of next month's budget.
- NIESR's analysis shows value added tax would lower real personal disposable income by nearly 3% and cut GDP by almost 1%, while hiking income tax would reduce GDP by only 0.05%.
- The think tank warned raising income tax would break the Labour manifesto pledge on "working people" but avoiding it would force more damaging measures, Ed Cornforth, NIESR economist, said.
- Reeves is considering measures including a bank tax, with analysts estimating combined proposals could raise more than 50 billion, though some would take time to implement.
9 Articles
9 Articles
UK's Reeves should break income tax promise in budget, think tank says
British finance minister Rachel Reeves should break her promise not to raise taxes on working people in next month's budget and increase income tax, rather than seek to raise revenue in more economically damaging ways, a think tank said on Friday.
If Rachel Reeves must raise taxes, the basic rate of income tax is the worst place to start
The Telegraph reported this morning that the National Institute of Economic and Social Research (NIESR) has told Rachel Reeves that raising income tax would be the least damaging way to fill what it described as a £30 billion hole in the public finances. They note: Adding 3p to the basic and higher rates of income tax would be less harmful than ramping up VAT, corporation tax, or a raft of smaller taxes, the institute said. This is the route to …
What will Rachel Reeves’ budget pay for and where will the money come from?
Rachel Reeves’ November budget is fast approaching, and steep tax rises are once again on the cards. Speaking at Labour conference last month, the Chancellor hinted at tax hikes by warning that she will be forced into “harder choices” by “harsh global headwinds”. To balance the books in accordance with her much-discussed fiscal rules, Reeves will have to commit to between £20bn and £30bn in “fiscal tightening,” according to a report published by…
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