Keir Starmer has not ruled out the possibility of increasing income tax in the upcoming Budget, as revealed during the recent PMQs session.
While assuring that there would be no return to austerity measures, the Prime Minister did not reaffirm Labour’s previous commitment made in last year’s General Election manifesto to avoid raising taxes on working individuals, including income tax, VAT, and national insurance.
During PMQs, Conservative leader Kemi Badenoch questioned Starmer about upholding the manifesto pledge. Starmer evaded a direct response and indicated that the government’s fiscal plans would be disclosed during Chancellor Rachel Reeves’s Budget presentation on November 26.
Badenoch highlighted Labour’s pledge from the previous year not to increase income tax, national insurance, or VAT, seeking confirmation from the Prime Minister. In response, Starmer emphasized positive economic indicators, such as higher retail sales, lower inflation, upgraded growth forecasts, and a record-high UK stock market.
Starmer assured the House of Commons that the government would unveil its economic strategies at the upcoming Budget, aiming to strengthen the economy, reduce NHS waiting lists, and secure a better future for the nation. He emphasized that detailed plans are typically revealed during the Budget announcement.
Subsequently, the Prime Minister’s press secretary refrained from reiterating the party’s previous stance on protecting workers from tax hikes, emphasizing that the Budget details would be disclosed on November 26 after the Office for Budget Responsibility’s final forecasts.
Reports suggest that Chancellor Reeves is contemplating an income tax increase to address a substantial budget deficit of £20-30 billion. One proposal being considered is adding 1p to the basic income tax rate, projected to generate approximately £8 billion in revenue.
Speculations also point to a possible increase in higher income tax rates in the November 26 Budget. Currently, the 40% tax rate applies to earnings above £50,271, with a 45% rate for incomes exceeding £125,140. The Treasury declined to comment on potential tax changes when approached by The Mirror last week.