(qlmbusinessnews.com Wed. 31st July, 2024) London, UK —
“Labour's Rachel Reeves Confirms Upcoming Tax Rises to Tackle Budget Deficit”
Chancellor Rachel Reeves has announced that the government is likely to raise certain taxes in the upcoming October Budget, following months of speculation about Labour's tax strategy. Speaking on the News Agents podcast, Reeves said, “I think we will have to increase taxes in the Budget,” in response to a question about funding needs after she claimed on Monday that the previous government had left a £22bn “hole” in the public finances.
During the election campaign, Labour had repeatedly assured that there would be no tax increases on “working people,” while the Conservatives warned that Labour would eventually raise taxes. When pressed on which taxes might be increased, Reeves referred to the Labour manifesto, which commits to no increases in VAT, national insurance, or income tax but leaves the door open for changes to inheritance tax, capital gains tax, and pension reforms.
“I'm not going to write a Budget or start to write a Budget on this podcast,” Reeves said, emphasising Labour's aim to adhere to “sensible” fiscal rules to reduce long-term government debt.
Reeves' comments follow a series of cost-cutting measures, including the scrapping of several infrastructure projects and the means-testing of the winter fuel allowance for pensioners, all part of efforts to address the financial shortfall.
A political row has erupted between Labour and the Conservatives over who is responsible for the depleted public finances. On Monday, Reeves accused the Conservatives of “undisclosed” spending that forced her to cut the winter fuel allowance and make other significant reductions. In contrast, Shadow Chancellor Jeremy Hunt has denied these claims, stating that the previous government was transparent about public finances and criticising Labour's recent spending decisions, including the establishment of the National Wealth Fund, GB Energy, and public sector pay rises.
The Institute for Fiscal Studies (IFS) has supported some of Labour's claims, indicating that the previous government's hidden spending on issues like the £6.4bn asylum system, including the Rwanda deportation scheme, was substantial. However, IFS director Paul Johnson noted that much of the financial shortfall is due to public pay decisions made by the government, which were known pressures.
Labour has already confirmed certain tax increases, with Reeves previously hinting at the need for “difficult decisions.” On Monday, she announced a windfall tax on oil and gas companies and a VAT on private school fees, both in line with Labour's manifesto promises. In response, Liberal Democrat Treasury spokesperson Sarah Olney has urged Labour to go further and ensure large companies “pay their fair share” of tax.
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