Rachel Reeves said Britons would not pay higher taxes. However, the “huge hole in finances” left by the conservatives forced the new government to increase fiscal pressure.
it’s a mea culpa which is having media coverage in the United Kingdom. The finance minister in Keir Starmer’s government admitted she was wrong when she said, ahead of July’s parliamentary elections, that tax increases would not be necessary. Last week, Starmer’s Labor executive increased several taxes. Rachel Reeves now admits she was unaware of the extent of what she calls the “huge black hole in the public finances” left by the previous Conservative Party government.
“I was wrong on June 11. I didn’t know everything, because when I arrived at the Treasury on July 5 [dia seguinte às eleições]A little less than a month after I said those words, senior Treasury officials took me to a room and told me I was introduced to the huge black hole of public finances, which I knew nothing about at the time of the general election.“Reeves said, in an interview with the Sunday morning show News from heavenhosted by Trevor Phillips.
The Finance Minister accused Rishi Sunak’s Conservative Government of having “hidden from the country” and from Parliament the magnitude of the public finance deficit, which, she stressed, is around 22 billion pounds (about 26 billion euros). Faced with this scenario, the Labor government decided, on Wednesday, increase taxes by £40 billion (47.5 billion euros), in what is considered the largest increase in the tax burden in the country in the last 30 years, since 1993.
Keir Starmer admits “turbulent days” in his first three months in Government
The tax increase will affect companies. The bulk of the tax increase (£25bn) will come from updating employers’ social contributions, which rise from 13.8% to 15% from April. Additionally, the lowest rate of capital gains tax will increase from 10% to 18%, and the highest rate from 20% to 24%. The VAT that private educational establishments must pay will also increase.
Rachel Reeves guarantees, however, that this is an unrepeatable tax increase. “It is not necessary to have another budget like this again. We won’t need to do this again.“said the Minister of Finance, adding that the government intends to fulfill the electoral promise it made, which includes not increasing taxes on “people who work.” However, Reeves admits that raising corporate taxes could have an impact on workers. “Businesses will now have to choose between absorbing this through efficiency and productivity increases, through lower profits or perhaps through lower wage growth.”
The Corporate Responsibility Office, an entity that monitors the government’s spending plans and performance, is leaning toward this last option, which has already warned that the Most of the corporate tax increase will be passed on to workers.through lower wages and consumers, with higher prices.
Source: Observadora
