Rachel Reeves is toast – but experts warn of terrifying legacy she’ll leave every taxpayer
Thought you were paying too much tax today? This is only the start.
Rachel Reeves is unlikely to be Chancellor for much longer, but our taxes will rise anyway (Image: Getty)
Rachel Reeves is lining up another tax blitz in her second Budget on November 26. Yet many believe it will be her last. Reeves is already clinging to office, battered by criticism from business, investors and her own MPs. She may not survive beyond the autumn.
But here’s the spooky bit. Even if Reeves goes, her brutal tax policies will live on.
That’s grim news, given that the UK tax take is already at its highest level since the Second World War.
Before the 2008 financial crash, taxes typically absorbed about 33% of national income. Today it’s up to 37% and rising fast.
Government spending accounts for 44% of national income. That leaves a 7% gap, which Labour is largely plugging by borrowing like never before.
As I revealed yesterday, Reeves is on course to borrow as much as £200billion this year, with £150billion of that swallowed up by debt interest alone.
Yet she still can’t make her sums add up, according to a new report by accountancy group KPMG.
Reeves has stalled the economy. Now she’s accused of destroying jobs and driving unemployment towards a five-year high.
KPMG reckons the jobless rate will climb to 4.9% by 2026, up from 4.7% today and 4.1% last summer, as firms retreat from hiring. That’s largely down to Reeves’s £25billion national insurance Budget raid on employers, branded a jobs tax, which has deterred companies from taking people on.
Bosses are freezing recruitment again, fearing further tax raids in November. They’re also running scared Angela Rayner’s employment rights bill, which will hand new staff full sickness rights from their very first day.
That means companies could be saddled with unproductive workers, a chilling prospect at a time of fragile growth.
Throw artificial intelligence into the mix, and we’re heading for a jobs bloodbath.
The Chancellor’s timing couldn’t be worse. The global economy is slowing, productivity is stagnant, birth rates are falling and the population is ageing fast.
This will make it even harder to square the nation’s books.
Which leaves Reeves, or whoever replaces her, with only one option. They’ll have to keep hiking our taxes, year after year.
KPMG warns we now face a staggering 10 more years of tax hikes, or what it calls a “gradual ratcheting up of tax revenues over the next decade” as spending demands climb and growth stagnates.
We don’t yet know which taxes will be targeted. Inheritance tax, property levies and capital gains are all in the frame this November.
The total could hit £20billion, £30billion or more. Whatever the number, it won’t be enough as Reeves goes berserk with the nation’s credit card.
Every fresh raid will crush growth further, leaving her successors chasing their own tails in a doom loop.
Reeves may be toast, but her legacy is clear. Ten more years of tax hikes lie ahead, whoever is in charge. Unless something really nasty intervenes, such as a full-blown fiscal crisis. Which is highly likely.
