Tax hikes will come if economy shrinks any further, IFS warns Rachel Reeves
Tax hikes ‘almost certainly’ to come if economy worsens, IFS says
- The Institute for Fiscal Studies (IFS) warned that further negative economic news will “almost certainly” lead to more tax increases, putting pressure on Chancellor Rachel Reeves.
- Council tax is projected to rise at its fastest rate in 20 years, with potential annual increases of up to 5 per cent as local governments struggle to close funding gaps.
- The IFS suggested more people may be forced to pay higher income tax rates due to 'fiscal drag,' potentially generating an additional £10bn a year by 2029.
- Government sources did not deny the possibility of extending the freeze on tax thresholds, stating that future tax decisions will be made at the Budget.
- IFS director Paul Johnson criticised the Treasury for “making up the numbers” and described Chancellor Reeves' recent speech as “baffling”, while also expressing concerns about the cost of Labour's childcare promises.