Keir Starmer and Rachel Reeves are preparing to soften Brits up for more eye-watering tax hikes, it was claimed today.
The PM and Chancellor are said to have started holding meetings on how to fill a black hole in the public finances estimated at up to £50billion.
A rise in gambling levies – backed by Gordon Brown this week – is thought to be ‘near-guaranteed’ in the package this Autumn but there are fears the pain will have to go much wider.
Labour MPs have been continuing to push for ‘wealth taxes’, with speculation over renewed raids on capital gains and pensions.
Sir Keir pointedly refused to rule out tax increases earlier this week, while the Bank of England has voiced concern about persistent inflationary pressure – which puts more pressure on the finances.
The PM and Chancellor are said to have started holding meetings on how to fill a black hole in the public finances estimated at up to £50billion
However, ministers have been adamant that they will stick to the manifesto promise not to target the main rates of income tax, national insurance or VAT.
The tax burden is already set to hit a new high as a proportion of GDP after the last Budget imposed a £41billion increase – the biggest on record for a single package.
One insider told the Guardian that the government wanted there to be ‘no surprises’ for markets in the Autumn.
‘Last year was a model of how to do it,’ the adviser said. ‘Had we done it otherwise, it would have been a mess.’
The National Institute of Economic and Social Research (NIESR) said earlier this week that Ms Reeves could have to find the equivalent of adding 5p to income tax to keep afloat by the end of the decade and meet her fiscal rules.
It found that the ‘wafer thin’ headroom of £9.9billion Ms Reeves left herself last year has been wiped out, and there is now a budget deficit of £41.2billion.
To fill the hole and maintain the buffer, the Chancellor will have to find £51billion annually in higher taxes or lower spending by 2029/30.
The PM insisted he didn’t recognise ‘some of the figures that are being put out’ amid suggestions that Rachel Reeves is on track to miss her fiscal rules.
But he failed to rule out significant tax hikes in the Budget.
Sir Keir said Ms Reeves would focus on ‘living standards’ and ‘making sure that people feel better off’ in Labour’s next fiscal package.
