3 godzin temu
UK Chancellor Rachel Reeves is expected to announce income tax increases in her November 26 Budget, potentially breaking Labour's manifesto pledge. Education Secretary Bridget Phillipson defended the move, blaming economic damage from Brexit and years of austerity.
Economic think tank National Institute of Economic and Social Research recommended raising the basic rate by 2p, which would generate around £20 billion. The organisation also suggested increasing the higher rate by 5p to 10p, yielding an additional £10 billion to £15 billion. These measures aim to address an estimated fiscal shortfall of £20 billion to £50 billion in public finances.
Phillipson told the BBC: «Where it comes to our manifesto, of course, we take the commitments we made seriously. And as the Chancellor was saying yesterday, we know that there are some big challenges in the economy.» She added that «the damage of the chaotic Brexit we saw, the damage of years and years of austerity was even more serious than we anticipated».
Political Fallout
Shadow Chancellor Mel Stride called for Reeves' resignation if she raises taxes again. «This is about choices. If Rachel Reeves breaks her word and raises taxes again, she must go. A responsible chancellor would get a grip on spending - including the welfare bill - not reach for yet another tax rise», he stated.
An unnamed minister quoted in The Times warned: «Breaking the manifesto will mean we lose some voters forever». Labour's election manifesto explicitly promised not to increase income tax, National Insurance, or VAT.
Reeves defended her position on LBC, suggesting that her resignation would destabilise financial markets. When pressed on breaking manifesto promises, she asked: «And what do you think would happen in financial markets if I did that?» She earlier stated that «each of us must do our bit» to address economic challenges.
If Reeves proceeds with the increase, she would become the first Chancellor in 50 years to raise the basic rate of income tax. The Office for Budget Responsibility is expected to downgrade productivity forecasts, further impacting economic growth projections and government revenue.
Note: This article was created with Artificial Intelligence (AI).
