(qlmbusinessnews.com Thurs. 30th May, 2024) London, UK —
Labour Pledges No Further Tax Increases if Elected.
Shadow Chancellor Rachel Reeves has assured that there will be “no additional tax rises” beyond those already outlined by Labour if they secure victory in the general election.
In her inaugural major speech of the campaign, Ms Reeves emphasised that every Labour policy would be “fully funded and fully costed – no ifs, no ands, no buts.”
Despite her assurances, the Institute for Fiscal Studies (IFS), an independent think tank, has cautioned that any incoming government might need to increase taxes or cut spending to address public finances.
Prime Minister Rishi Sunak has claimed that Labour's plans would cost “every working family” £2,000 each.
Speaking at Rolls-Royce in Derby, Ms Reeves reiterated Labour's commitment to recruiting thousands of additional teachers and providing 40,000 new NHS appointments weekly.
She outlined that Labour's strategy to restore economic stability would be supported by “robust fiscal rules,” which include ensuring national debt decreases as a share of national income by the end of the parliament.
However, the IFS has indicated that the state of public finances casts a “dark cloud” over the election, suggesting that the winning party might need to cut spending or raise taxes – a notion Ms Reeves dismissed on Tuesday.
Ms Reeves expressed her desire to reduce taxes and raise income tax thresholds, which have been frozen since 2021, potentially pushing people into higher tax brackets as their incomes rise.
“I want to reduce taxes and increase those tax thresholds so people don't pay so much on their income,” she told the BBC. “Unlike the Conservatives, I won't make promises without explaining how they will be funded because that's just a gimmick.”
If Labour wins, it is unlikely that there will be a Budget before September. Ms Reeves stated that Labour would not present a Budget without an independent forecast from the Office for Budget Responsibility (OBR), which requires a ten-week notice.
In her speech, Ms Reeves positioned Labour as “the natural partner of business,” highlighting a letter from 121 business leaders endorsing Labour's economic plans and calling for change.
Labour has also pledged to recruit more teachers, provide extra NHS appointments, and hire 13,000 additional police and community officers. They plan to raise funds by ending the VAT exemption for private schools and imposing a “proper windfall tax” on oil and gas companies, increasing the rate from 75% to 78%.
Additionally, Labour aims to generate £5bn annually by addressing tax avoidance and evasion and £2.6bn by closing “loopholes” in non-dom tax exemptions.
Corporation tax, currently at 25%, will be capped, though Labour will “act” if competitiveness is threatened.
Work and Pensions Secretary Mel Stride criticised Labour for not specifying any tax cuts. Over the weekend, the Conservatives promised to increase the tax-free pension allowance.
Both parties have committed to maintaining the Triple Lock guarantee for pensions, ensuring annual increases in line with inflation, earnings growth, or 2.5%, whichever is higher.
Ms Reeves told the reporter: “I want to reduce taxes for working people and pensioners, but I will do it in a costed and funded way, through economic growth, something the Conservatives have failed to achieve.”
Mr Stride countered, saying: “Only Rishi Sunak and the Conservatives have a clear plan, backed by bold action, to end the double tax on work and protect pensioners with a new tax-free threshold.”
The Liberal Democrats highlighted businesses' need for stability and certainty after years of Conservative governance. “The Liberal Democrats would launch an industrial strategy to boost investment and reform the broken business rates system,” a spokesperson said.
The Green Party emphasised investing in sustainable technologies for a secure future, while the SNP criticised Labour for ignoring Brexit's role in the UK's economic decline. Plaid Cymru's Treasury spokesman, Ben Lake, said his party would “invest in the Welsh economy to drive growth and reduce inequality.”
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