Rachel Reeves has ruled out hiking income tax on November 26 but will hit us with a “smorgasbord » of smaller levies instead. Arguably, this could be more painful, with tens of millions paying up. Working people will be hit by if she extends the freeze on income tax thresholds to 2030, as expected. Savers and pensioners will be hit by plans to slash the Cash ISA allowance.
Pensions are under threat as Reeves considers cutting pensions tax relief, slicing the annual allowance on pension contributions and scrapping salary sacrifice schemes. The Chancellor will also come after our homes, by hiking council tax or hitting pricier properties with a mansion tax, or both. She may also tighten rules on inheritance tax (IHT) gifting, and even hit families with a double death tax.
Today, when someone dies any capital gains tax (CGT) liability on assets is wiped out. Families just pay IHT. In future, they may pay both.
And that’s on top of paying IHT on unspent pensions, a move announced in last year’s Budget and due to come into force in 2027.
Rachel Reeves is literally taxing us to death – and beyond. Worse, this is only the start.
After hiking taxes by £40billion in last year’s Budget, the biggest raid since 1993, Reeves promised she wouldn’t come back for more. Now she’ll be back for another £30billion at least. I can see three reasons why this won’t be the last big raid. The first is that it will backfire, just like the last one.
In her maiden Budget, Reeves slapped a £25billion jobs tax on British businesses, piling more pressure onto already struggling firms. Unemployment has rocketed. Many businesses have folded. This has killed growth and widened her black hole.
This Budget will accelerate today’s economic exodus as better-off Britons up sticks. Some 257,000 have cleared off in the last year, and more will follow. They’ll take their tax revenues with them, leaving fewer Brits to bear the burden.
Reeves will scare off more entrepreneurs, who won’t see the point of setting up here and working hard when HMRC confiscates their wealth at the end of it. The second reason is even more alarming.
As the economy slows, unemployment will rise again, especially among the young, many of whom will simply give up job hunting and claim benefits instead.
This means even more Britons will be claiming welfare, on top of the four million who’ve already been signed off for life.
Public spending now swallows 45% of the UK’s annual income, up from 33% when Margaret Thatcher stepped down in 1990. As the nation ages and gets sicker, that’s only going to rise unless the government gets a grip – and Labour won’t.
A dwindling number of taxpayers will be called on to plug the gap next year, and the year after, and the year after that.
The third reason is the really rotten one. This tax blitz is ideological. All across the left, from the New Statesman to The Guardian’s Polly Toynbee to wealth tax activists, they’re demanding this.
They want the government to tax more. They want to wage class war on the rich. They want to throw even money at the state, despite its lousy record of spending it effectively.
Reeves will pretend this has been forced by events beyond her control, but that’s rubbish. This is ideological. It’s the plan and it’s working. Labour won’t just tax us to death, it’ll kill the UK economy too.
