Chancellor Rachel Reeves announced plans to target individuals with significant assets as a means to address the UK’s fiscal challenges during her participation in the IMF annual meetings in Washington DC, where the organization downgraded the country’s growth forecasts for the upcoming year, reports BritPanorama.
Reeves aims to bridge a £30 billion financial gap amid sluggish economic growth, evidenced by a mere 0.3 percent increase in output for the three months leading up to August. Her statement underscores a strategic pivot towards taxing wealth rather than solely focusing on high-income earners.
“I do think that those with the broadest shoulders should pay their fair share of tax. You can see that through my actions last year at the Budget,” Reeves stated, indicating that tax implications for the wealthy will form a key component of her upcoming budget proposal.
Despite the looming financial hurdles, Labour remains committed to maintaining existing rates for income tax, VAT, and national insurance. Reeves quickly clarified the distinction between wealth and income, asserting, “Wealth is obviously different from income, isn’t it? So wealth is not about your annual salary.”
Reeves is also reportedly keen to enhance the current financial buffer of £10 billion, which economists caution may not be sufficient to avert ongoing shortfalls. The Institute for Fiscal Studies has advised increasing fiscal headroom to prevent a cycle of precarious budgeting.
“Would I like more headroom? Of course I would, but that does come with trade offs, because more headroom requires more tax revenue or less spending on public services like the NHS,” Reeves added, emphasizing the need for a balanced approach to public finances.
While she acknowledges the necessity of some tax increases and spending cuts, Reeves has warned against measures that might drive wealth away from Britain, especially as taxes in the UK are rising at a rate faster than in many other major economies—potentially undermining growth and competitiveness.
She reiterated her commitment to fiscal discipline, stating, “The numbers will always add up with me as Chancellor because we saw just three years ago what happens when a government, where the Conservatives, lost control of the public finances: inflation and interest rates went through the roof.”
Reeves remains firm that the financial strategies she proposes during the upcoming budget will be designed to ensure stability and prevent the past mistakes of overspending.
