After months of speculation about Labour’s tax stance, the chancellor indicated that some taxes may be increased in October’s Budget.
Rachel Reeves stated in the News Agents podcast that she believes taxes will need to be raised in the Budget.
Her response came after being asked about fundraising in light of her statement on Monday that the former administration had created a £22bn deficit in the public budget.
Labour consistently stated throughout the election that there would be no tax hikes for “working people”, while the Conservatives argued that Labour planned to raise taxes.
During the podcast, the chancellor was questioned about which taxes the government would increase.
The government has already revealed plans to apply a 20% standard rate of value added tax (VAT) to private school fees in order to finance 6,500 new teachers in England.
Ms. Reeves reiterated the Labour manifesto promise of no hikes in VAT, national insurance, or income tax on Tuesday, but avoided excluding the possibility of changes to inheritance tax, capital gains tax, or pension policies.
She stated that she will not be drafting or beginning to draft a Budget on the podcast, emphasizing that Labour intends to adhere to “reasonable” guidelines to reduce the government’s long-term debts.
Ms Reeves recently commented on the cancellation of several infrastructure projects and the introduction of means-testing for the winter fuel allowance for pensions. These measures were implemented to address a deficit in the public finances.
Labour and the Conservatives are in a dispute over responsibility for the shortage of funds in the public treasury.
Ms Reeves announced on Monday that the Conservatives’ “unrevealed” expenses led her to eliminate the winter fuel payment and implement billions of dollars in additional reductions.
Jeremy Hunt, the shadow chancellor, refuted this claim by stating that the previous government was transparent about public finances.
He strongly argued that the choices made by the Labour party were being criticized, pointing out the government’s spending decisions after coming into power.
He stated that the combination of the National Wealth Fund, GB Energy, and salary increments for public sector employees totaled in the billions.
He told BBC Breakfast on Tuesday that if she chooses to make those decisions, she will need to increase taxes and should be honest about them.
The IFS has stated that Labour’s allegations of undisclosed spending by the prior administration seem to have merit.
This consists of £6.4bn allocated to the asylum system, including the deportation scheme with Rwanda, a figure described as “enormous” by IFS director Paul Johnson.
Nevertheless, he included that “50% of the spending deficit is due to public sector wages, which the government willingly decided on and were already aware of the pressures.”
Labour has already acknowledged certain tax increases while the chancellor has previously hinted at the necessity of making “tough choices.”
Ms Reeves revealed on Monday that there would be a new tax imposed on oil and gas corporations and an increase in VAT for private educational institutions – both promises from their initial manifesto.
In reply, Sarah Olney, the Liberal Democrat Treasury representative, encouraged Labour to take additional steps and ensure that big companies contribute their fair portion of taxes.
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