Chancellor hints at income tax rise in upcoming budget
Britain’s finance minister avoided confirming whether income taxes will rise next month after reports suggested officials are discussing breaks from campaign promises. Rachel Reeves told journalists on Friday she would keep working people’s taxes low but refused to repeat her earlier pledge against raising income tax, National Insurance, or VAT. Treasury staff are examining a one-penny increase to the basic rate that could generate over 8 billion pounds annually.
The government borrowed 20.2 billion pounds in September, the highest for that month in five years, leaving Reeves with tight margins to meet fiscal targets. Lower productivity forecasts created a 22 billion pound shortfall in public finances and eliminated most of the 10 billion pound buffer built up in March. The chancellor must ensure debt shrinks as a share of economic output by 2029 while covering daily spending through tax revenue rather than borrowing.
The Institute for Fiscal Studies said Reeves will almost certainly need to raise taxes to stay within those limits. Any income tax increase would mark the first rate hike since 2010. The budget statement arrives on Nov. 26 as Reeves attempts to balance financial discipline against voter expectations.
