Rachel Reeves, the UK Chancellor of the Exchequer, is expected to abandon plans to increase income tax rates during the upcoming Budget scheduled for November 26, 2023. According to a report from the Financial Times, both Reeves and Prime Minister Rishi Sunak have reconsidered the tax hike, which would have contradicted their election manifesto commitments. This decision comes amid concerns that such a move could alienate voters and members of the Labour Party.
During an appearance on BBC Breakfast, Culture Secretary Lisa Nandy emphasized that “no decisions were made or set in stone” until Reeves formally presents the Budget in the House of Commons. The Treasury has not yet responded to requests for comment regarding these developments.
While Reeves had not explicitly confirmed her intention to raise income tax rates, she had not ruled it out either. Earlier this month, she delivered a pre-Budget speech highlighting the necessity of making “necessary choices” in the face of economic challenges. Reeves cautioned that “everyone would have to contribute,” indicating a willingness to explore various fiscal options.
The potential tax increase had been a point of contention within the Labour Party, with some MPs expressing concerns that it could lead to voter backlash. As the government prepares for the Budget announcement, the decision to step back from the tax hike reflects a strategic pivot aimed at preserving public support.
As discussions continue within the party and among the public, the final details of the Budget will be closely watched. The upcoming presentation by Reeves is expected to outline the government’s economic strategy and address pressing fiscal challenges facing the UK.
