If income tax isn’t going up… what is, chancellor?

If a week is a long time in politics, two weeks is an age away. It was a fortnight ago, give or take, that the press were summoned to 10 Downing Street for an early morning pre-Budget briefing from the chancellor.

Such an event was virtually unprecedented. Clearly, Rachel Reeves had something significant to say. It quickly became clear this was a softening-up exercise, warning “each of us must do our bit”. In her sights, plainly, were the Labour manifesto untouchables of a rise in national insurance, VAT and income tax. But such was the gap in public funding that they were no longer off limits.

Subsequently, the consensus focused on a rise in income tax. There were no denials, just embarrassed shrugs by Labour high-ups whenever it was mentioned.

Then suddenly, the mood music changed today. Apparently, according to one aide – briefing anonymously, naturally – it is thought to be a “compromise too far”. Income tax will not be going up when Reeves soon stands at the despatch box.

What’s changed? There was the party bracing itself for an almighty electoral betrayal; the backbenches thought so, the opposition thought so, and so did supposedly well-informed commentators. Now, though, it’s gone.

Officially – if that is how the reversal can be described – the reason is that the fiscal forecast has improved. Instead of a £30bn black hole, it is now put at £20bn.

What has really altered, of course, is the political atmosphere. Since that bizarre breakfast press conference – and it was strange, with Reeves herself looking as though she had not slept and conveying a sense of panic at what lay ahead – Keir Starmer has come under intense pressure. There is serious talk, for the first time, of a plot to oust him. There is a definite sense of something being afoot.

In that context, ditching a pledge that got them elected could easily prove fatal. Lo and behold, targeting income tax is no longer on the agenda. Also, presumably, that applies to national insurance and VAT.

But Reeves has to find the cash from somewhere – so now we’re steered towards a “smorgasbord” of tax increases, which, when added up, will represent that sought-for, hefty amount.

So what will this unappetising buffet contain?

Based on political expediency and the existential threat to Starmer, the chancellor is likely to do as little as possible to provoke Labour supporters: the prime minister’s position is simply too fragile to take many chances.

Instead, then, the crosshairs are likely to settle on those who cannot draw on widespread appeal. Attacking them will be regarded as fair game and will be welcomed by those mutinous and anxious MPs. That means the wealthy – and that means property.

A “mansion tax” in some shape or form must be back on the cards, possibly as an additional element of council tax.

Another word that sits well with the Labour faithful is “windfall”. Their folks don’t enjoy unexpected injections of wealth, but banks do. The feeling persists that the banks never paid the price for 2008 – unlike ordinary citizens, who stumped up the bailouts and suffered from the austerity measures that followed. Worse, the banks reaped the rewards of the quantitative easing programme, implemented to provide stability. Now, possibly, they must pay.

Into that category, too, fall those giant, tech-based corporations, which for years have been selling to the British public, reaping enormous profits, but not booking the sales and paying taxes here. They could well be in Reeves’s sights.

Solicitors and professional services partnerships, or LLPs, will almost certainly feature. They are protesting vigorously but – as with VAT on private schools – their shrieks are falling on deaf ears. The loophole they’ve enjoyed, releasing them from employers’ national insurance, is likely to be firmly closed.

Inheritance tax and capital gains tax, again the domain of the better off, may be there. A raid on pensions has also been mooted, but the government is wary of upsetting the public service unions – so perhaps not this time. Tourist taxes, which looked as if they might be scrapped, to the delight of the luxury goods retailers, may now continue.

These, and more, could be part of Reeves’s smorgasbord. It will be bitty and painful, and it will add up. It also means the Budget has swung from propping up the national finances to saving Starmer.