RACHEL REEVES has told the country's budget watchdog that a rise in personal taxation is among the "major measures" she is preparing to announce in her budget.
Reeves is expected to raise tens of billions of pounds in taxes in her November 26 budget to stay on track for her fiscal targets, which remains a key issue for bond investors, The Times reported on Thursday, confirming earlier reports.
The Times said that while Reeves could still change course, the measure’s inclusion in the government's official submission to the Office for Budget Responsibility shows it is under serious consideration.
A spokesperson for Reeves' office said she had set out "the context for the budget, recognising global and long-term economic challenges."
"It will continue to build the strong foundations to secure Britain's future and on the priorities of the British people – cutting waiting lists, cutting national debt and cutting the cost of living," the spokesperson added.
The report said Reeves was considering a two-pence increase in income tax alongside a two-pence cut to National Insurance contributions to shift the tax burden away from workers and towards groups including pensioners and landlords.
It also said she was looking at a cap on the National Insurance cut, limiting it to earnings below £50,270. Economists estimate the move could raise more than £6 billion (8 billion dollars) annually.
Under the plan, the rate would fall from 8 per cent to 6 per cent for lower earners, while income above that threshold would continue to be taxed at 2 per cent, The Times reported.
On Tuesday, Reeves said that "each of us must do our bit," raising expectations of a break from Labour's election pledge not to raise major taxes.
She said she would pursue broad tax rises to avoid a return to austerity and maintain public spending, highlighting high debt levels, weak productivity and persistent inflation.
The National Institute of Economic and Social Research has urged Reeves to find £50 billion worth of measures, according to the report.
