It could be 30 per cent. Or 35 per cent? Or perhaps 39 per cent? Heck, who knows, if Rachel Reeves wants to keep the accountants on their toes, perhaps 39.657 per cent. The Treasury is, according to the latest leaks to the Guardian, looking at an increase in Capital Gains Tax as it scrabbles around for tax rises to fund the Chancellor’s spending plans, while not putting up the amount ordinary people are paying. The trouble is, whatever number she picks it is not going to work – and Rachel Reeves is fast gaining a reputation as a shambolic Chancellor.
The list of failed tax rises from the new government is growing every day
Given how much time Reeves spent boasting about how she ‘knew how to run the economy’, and the plaudits from the likes of Mark Carney, we might at least have assumed that she had a plan for raising more money from the ‘rich’ to fund generous wage rises for the public sector and the billions to be spent on GB Energy and the National Wealth Fund. With only a little over two weeks to go until her first Budget, however, there is very little sign of it.
According to the Guardian, she is now toying with hiking Capital Gains Tax to 39 per cent, presumably on the grounds that an odd number will confuse everyone so much they won’t really notice. On some other planet that might work, but not unfortunately on this one. The Treasury is already warning that while that may raise money in year one, it will quickly lead to lower revenues, as anyone with any gains postpones selling, or flees abroad.
The list of failed tax rises from the new government is growing every day. It has already become clear the raid on non-doms will generate nothing because so many of them are leaving. Putting VAT on school fees doesn’t look like it will raise much either. And pension funds can’t be raided without hitting the public sector. One by one, her plans are falling apart.
In reality, Reeves is paying the price for her dishonesty during the election campaign. It is not possible to increase public spending significantly without raising taxes for ordinary people. As that becomes clear, she will either have to raise taxes for everyone, or else cut spending. Either way, she has had a chaotic start as Chancellor – as is becoming painfully clear as her first Budget draws near.
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