huffingtonpost - 26 days ago

Chancellor Rachel Reeves has reportedly decided not to raise income tax.Rachel Reeves has reportedly ripped up her plans to hike up income tax in the Budget later this month.As first reported by the Financial Times late last night, the chancellor unexpectedly decided to ditch her idea to raise income tax by 2p while dropping VAT by 2p, fearing backlash from already irate MPs and voters.That was meant to raise more than £6 billion, a notable sum which would have help edthe chancellor plug the £30bn black hole in the public finances.The “2 up, 2 down” move was also intended to push much of the financial burden onto landlords and pensioners, protecting the “working people”.But hiking up income tax would be a breach of the Labour government’s manifesto pledge.Successive governments have also avoided increasing this core tax out of fear of public backlash – the last time it was raised was back in April 1975, by Labour prime minister Denis Healey.According to the FT, forecaster the Office for Budget Responsibility was informed on Wednesday that Reeves had changed her mind.She is now looking at a collection of narrowly drawn taxes to try and fill that black hole – even though the Budget deadline is getting very close, and the chancellor is set to unveil it on November 26.Reeves may look at a gambling levy and increasing taxes on high-value properties.She may also extend the freeze on income tax thresholds, sometimes known as a stealth tax.This would raise £8.3 billion but it would mean pensioners could be dragged into paying tax on the state pension.The Times has reported that Reeves has dropped plans to tax lawyers, accountants and private doctors, those who use limited liability partnerships, too.Treasury modelling allegedly found these measures would cost the government more than they would raise because people would take action to avoid such a charge.There’s further speculation the chancellor might look to impose a “settling up charge” on wealthy Brits who leave the country and head to low-tax havens, too.Related...Rachel Reeves Planned Tax Betrayal Could Be The Death Of LabourAnalysis: Rachel Reeves s Planned Tax Betrayal Could Be The Death Knell For LabourAll The Times Rachel Reeves Promised Not To Hike Taxes Again

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