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Rachel Reeves Have abandoned plans to break up LaborManifesto Pledge and Increase income tax in this month BudgetThis has been reported.
chancellor Income tax increase was expected Given the stark differences in its spending plans, Asch indicated as recently as Monday that the alternative would be “deep cuts” in public investment.
But financial Times has told that he is now abandoned those plans Fearing they might anger both voters and backbench Labor MPs.
According to the newspaper, the decision was communicated to the Office for Budget Responsibility (OBR) on Wednesday, when the Chancellor handed in a list of “key measures” to be included in his budget on 26 November.
An income tax increase would help them bridge the fiscal crisis, which some economists have estimated at £50 billion, but it would also break Labour’s express manifesto pledge not to raise income tax, National Insurance or VAT.
The possibility of a breach of the manifesto was criticized earlier this month by Labour’s new deputy leader Lucy Powell, who said it would damage “confidence in politics”.
Having vowed not to return to “austerity” through more spending cuts, the Chancellor may now have to rely on a wide range of small tax rises if he is to stick to his self-imposed rules on lending and borrowing.
financial Times It was suggested that one option would be to reduce the income tax threshold while keeping tax rates the same, which could raise billions of pounds for the Exchequer.
Ms Reeves began November with a speech in which she failed to rule out an income tax rise, having previously said Labor would stick to its manifesto commitments.
On Monday he told the BBC that sticking to those commitments would require “things like deep cuts in capital spending” that could hurt productivity growth.