{"id":475463,"date":"2025-10-05T08:39:09","date_gmt":"2025-10-05T08:39:09","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/475463\/"},"modified":"2025-10-05T08:39:09","modified_gmt":"2025-10-05T08:39:09","slug":"rachel-reeves-lines-up-budget-tax-bomb-but-must-first-admit-to-lying-personal-finance-finance","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/475463\/","title":{"rendered":"Rachel Reeves lines up Budget tax bomb but must first admit to lying | Personal Finance | Finance"},"content":{"rendered":"

What Rachel Reeves does in her autumn Budget on November 26 will define her career. It may also define PM Keir Starmer<\/a>\u2019s tenure, and how voters view the Labour Party for a generation. Obviously, this isn\u2019t going to be an easy decision.<\/p>\n

At the very least, Reeves has to hit us with up \u00a330billion worth of taxes to plug the black hole she\u2019s blown in the nation\u2019s finances<\/a>. It could be as high as \u00a341billion, according to the National Institute of Economic and Social Research.<\/p>\n

That sum exceeds the roughly \u00a340billion she raised in last year\u2019s Budget, a tax and spending spree that killed economic growth and sent the UK careering toward a fiscal crisis. More of the same will inflict yet more damage, but that won\u2019t stop her.<\/p>\n

Reeves should be cutting taxes instead of hiking them, but she won\u2019t. Restive Labour backbenchers won\u2019t stomach cuts<\/a>, and Starmer is too weak to face them down.<\/p>\n

The bond market doesn\u2019t want to see more borrowing, and Reeves won\u2019t fiddled with her \u201ciron-clad\u201d fiscal rules.<\/p>\n

So she must go for the tax jugular.<\/p>\n

Tinkering won\u2019t do it. Proposed inheritance tax tweaks might only raise a billion or so. Taxes on capital gains or wealthy non-doms could cost more than they raise. Another raid on businesses will destroy yet more jobs. So what will Reeves do?<\/p>\n

One option is to extend the freeze on income tax thresholds, currently set to run until 2028. That would raise \u00a37 billion a year, maybe a little more.<\/p>\n

But it still won\u2019t plug that gap.<\/p>\n

Other ideas are being floated: curbing pension tax relief, extra levies on gambling firms and the big banks, and even council tax hikes.<\/p>\n

But none of those will plug a hole of this magnitude. Now Starmer and Reeves are flirting with going nuclear.<\/p>\n

Last week, Darren Jones, recently installed as the PM\u2019s chief secretary, hinted that Labour might hike one of the big three taxes \u2013 income tax, national insurance or VAT.<\/p>\n

That won\u2019t be easy either. Given that Labour explicitly promised that it wouldn’t raise them in last year’s manifesto.<\/p>\n

If they reverse course, they\u2019ll have won on a lie. The decision could doom Starmer and Reeves. Yet faced with a yawning shortfall largely of her own making, they may see no other way out.<\/p>\n

A think tank close to Labour, the Resolution Foundation, has floated one possible get out. Cut NI by 2p then tack it on to income tax.<\/p>\n

That would drag more pensioners into the tax net<\/a> while letting ministers claim the burden has not fallen on \u201cworking people.\u201d It\u2019s about as slippery as it gets.<\/p>\n

But it still won\u2019t be enough. At most, it will raise \u00a36billion.<\/p>\n

By contrast, a 2p rise on the basic income tax rate for everyone might raise up to \u00a314 billion. That\u2019s still shy of target, but it\u2019s a lot closer.<\/p>\n

To do so would force Starmer\u2019s team to admit explicitly that they lied during the election. Voters already feel cheated. A naked confession would be brutal.<\/p>\n

Yet Reeves may have no choice and will have to drop the ultimate tax bomb. But first, she has to admit she lied to us. And so will her boss. And there\u2019s no way back from that.<\/p>\n","protected":false},"excerpt":{"rendered":"What Rachel Reeves does in her autumn Budget on November 26 will define her career. It may also…\n","protected":false},"author":2,"featured_media":475464,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,4],"tags":[22664,807,528,157907,12,619,16,83141,15],"class_list":{"0":"post-475463","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-uk","8":"category-united-kingdom","9":"tag-income-tax","10":"tag-keir-starmer","11":"tag-labour-party","12":"tag-labour-party-fiscal-strategy","13":"tag-news","14":"tag-rachel-reeves","15":"tag-uk","16":"tag-uk-tax-policy","17":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115320662572588986","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/475463","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=475463"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/475463\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/475464"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=475463"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=475463"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=475463"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}