Labour’s tax shambles deepened today as a minister suggested only those on ‘average incomes’ will be protected from looming hikes.
Roads minister Lilian Greenwood appeared to commit to protecting those on incomes of up to £39,000 from desperate efforts to fill a black hole in the public finances.
But she gave another strong hint that the ‘wealthy’ will be hammered by Chancellor Rachel Reeves – saying the government thought those with the ‘broadest shoulders’ should pay.
The comments came as Ms Greenwood was grilled what her boss, Transport Secretary Heidi Alexander, meant when she said on Sunday that the those on ‘modest incomes’ would be spared pain.
She told Sky News: ‘I think it means people who earn kind of around average income.’
Challenged that was roughly £39,000 a year, she added: ‘I can’t tell you exactly what the Transport Secretary had in her mind when she said that, but our promise when we came in was that we wouldn’t hit working people with increases in employee national insurance, in income tax or VAT, and we’ve absolutely stuck to those promises.’
Pressed that she seemed to be saying there was a wealth tax coming, Ms Greenwood replied: ‘Well these are decisions for the Chancellor, but clearly we’ve always said that we think those who’ve got the broadest shoulders should bear the greatest burden.’
Yesterday Ms Reeves pointedly only committed to holding rates on ‘taxes that working people pay’.
Visiting a school in Wigan, she suggested that just meant no change to income tax, employee national insurance and VAT as she struggles to fill an estimated £30billion black hole.
But pushed on Labour demands for a ‘wealth tax’, Ms Reeves said: ‘We haven’t even set the date for the budget yet, so please forgive me if I don’t speculate about what might happen at an event we haven’t even decided a date on yet.’
Treasury Chief Secretary Darren Jones sparked a fresh bout of confusion by pointedly saying ‘headline’ rates of income tax, NICs and VAT will not change.
Speculation has been mounting about a ‘wealth tax’ – something Labour MPs have been baying for despite alarm at signs of an exodus of the rich from Britain.
Downing Street has refused to rule out a wealth tax, although Ms Reeves previously said she was ‘not interested’ in the idea.
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.
But experts have suggested that the stalling economy together with spending pressures could mean Ms Reeves has a £31billion funding gap to fill.
Many believe the Chancellor will opt to extend the long-running freeze on tax thresholds.
The policy, in place since 2022, is due to end in 2028-29. By that point it will have dragged an extra 4.2million people into the tax system as wages rise.
