Reeves must abandon manifesto tax pledges, think tank says amid £30bn Budget black hole
Chancellor urged to hike taxes as £30bn Budget shortfall looms
- Chancellor Rachel Reeves is facing significant pressure to increase taxes, with a leading think tank advising her to reconsider manifesto pledges against raising income tax, national insurance, or VAT.
- This urgency arises from an expected £30bn shortfall in the upcoming Budget, attributed to revised productivity forecasts, government policy reversals, and higher interest payments.
- The Institute for Government (IfG) recommends that the chancellor undertakes comprehensive tax reform instead of making inconsistent, piecemeal changes.
- Despite the mounting pressure, the government has repeatedly affirmed its commitment to not increasing the rates of VAT, income tax, or national insurance.
- Other bodies, such as the Resolution Foundation, have suggested specific tax adjustments like a 2p cut in national insurance balanced by a 2p rise in income tax.