Labour has promised that the tax hikes being planned will not directly impact workers’ pay, according to the education secretary. The government is gearing up to announce a significant budget next week, with expectations of an increase in employers’ national insurance contributions. This move could potentially raise between £8.5bn and £20bn.
Bridget Phillipson assured on Sunday that the tax rises proposed by Rachel Reeves would not affect the take-home pay of employees. Ministers are working to clarify their manifesto pledge not to raise taxes on “working people.” The upcoming budget, to be presented by Reeves, is expected to include around £40bn in tax rises and spending cuts, alongside changes to debt rules to allow for more infrastructure spending in the long term.
The chancellor is likely to implement a 1p or 2p increase in national insurance contributions, along with a reduction in the threshold for companies to start paying these contributions. Additionally, plans include raising VAT on school fees, increasing inheritance tax on land, and raising capital gains tax on profits from selling shares.
The debate over whether Labour will uphold its pre-election promises not to increase taxes on working people has caused concern within the party. The definition of “working people” has been a point of contention, with Prime Minister Keir Starmer clarifying that it refers to those who earn money through labor rather than assets like shares or property.
Some Labour members, including Peter Mandelson and Andrew Griffith, have expressed worries about the potential impact of the tax rises. Mandelson emphasized the need for universities to be reimbursed for any tax increases, warning of negative consequences for lecturers’ and teachers’ pensions if not addressed.
In conclusion, the upcoming budget announcement by Labour is anticipated to bring significant tax hikes, but assurances have been made that these will not directly affect workers’ pay. The ongoing debate over the definition of “working people” and concerns raised within the party highlight the complexity and challenges of implementing such financial measures. It remains to be seen how the government will navigate these issues and fulfill its promises to the public.
