Rachel Reeves won’t dismiss potential for more tax increases post-election if Labour uncovers financial gap

Shadow chancellor Rachel Reeves has declined to rule out the possibility of tax rises beyond income tax, national insurance, and corporation tax if Labour discovers a financial deficit in the public finances upon entering government.

In an interview, Reeves avoided questions about the potential state of the government’s books if Labour were to win the election and how the party would generate the necessary funds to address pressing issues.

While she maintains that her plans are fully funded, she clarifies that any existing tax increases are solely intended to fulfill prior commitments and states, “We have no plans for increased taxes.” However, when pressed on the possibility of raising other taxes in the event of a financial deficit, Reeves asserts, “I’m not going to write a budget here.”

During her campaign speech in Derby, the shadow chancellor distinguishes between income tax, national insurance, and corporation tax, confirming that her party has already ruled out any rises in these areas for the duration of the parliament. However, when asked about potential steps to address a financial deficit upon entering government, Reeves chooses not to engage, despite concerns among some Labour members about immediate cost pressures from various sources, including the prison system, local councils, and the need to fund compensation schemes such as those for victims of infected blood.

“We have no further plans for tax increases, whether to address financial deficits or otherwise,” Reeves asserts. However, analysts point out that Labour has not made any promises not to raise VAT, and the party has already announced its intention to extend this tax to private schools.

Reeves emphasizes the fully costed and funded nature of Labour’s plans, in contrast to those of the Conservative party. She states, “We don’t need to increase VAT or any other taxes because we have fully costed and funded plans. People can have confidence in our proposals, and we will provide a clear explanation of where the money will come from.”

On the same day as her campaign speech in Derby, Reeves spoke with Sky News, reiterating Labour’s commitment to being the “natural party of British business” and supporting workers. She also reaffirmed the party’s intention to bring the UK closer to the European Union and attract investment to Britain.

Reeves also took aim at the Conservative party’s proposed “triple lock plus,” which would create a new tax-free allowance for pensioners. Under this plan, a pensioner’s allowance would increase in line with either average earnings, inflation, or 2.5% – whichever is higher – beginning in April 2022. This follows the same rules as annual state pension increases.

The shadow chancellor criticized Chancellor Rishi Sunak’s proposal, stating, “He is desperately adding more baubles to a Christmas tree.” Reeves added, “The truth is, without a clear explanation of where the money will come from, these numbers simply do not add up and are not feasible.”

In conclusion, Reeves urges voters to consider the choice between “chaos and decline” under the Conservatives or a changed Labour party offering stability. She argues that after the past few years, stability is synonymous with change.

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