Nov. 26 (UPI) — Britain’s Chancellor Rachel Reeves has defended her new budget to the parliament to the consternation of many who claim the Labour government is raising taxes on working people and going back on its promises.
The most controversial budget item is the freeze on tax thresholds. Normally, tax thresholds — tax brackets — are raised with inflation. But the freeze means that some people who get a raise in income will be put into higher tax brackets, forcing them to pay more.
Reeves has said that freezing tax thresholds does not breach Labour’s manifesto, which said, “Labour will not increase taxes on working people, which is why we will not increase national insurance, the basic, higher, or additional rates of income tax, or [value-added tax]”
Reeves hosted a press conference outside a hospital and defended the freeze. A Sky News political editor challenged her, saying that in a speech last year, Reeves said that freezing tax thresholds would be a breach of the party’s manifesto. The reporter asked, “How in good conscience can you stay on in your job?”
Reeves answered that the manifesto was about the rates of income tax and VAT. But that she was “not going to get into semantics.”
“If you read the manifesto, we’re very clear. We say the rates of income tax, national insurance and VAT. But if you are asking, does this have a cost for working people? I acknowledge it does. As I said that in the budget last year. I’m not going to pretend otherwise today.”
Another controversial change is that the new budget removes the two-child benefit cap, which only allows parents to get tax credit for up to two children. Critics say the cap prevents people from having more children just to get more tax breaks. But others laud the plan because of its potential to lift children out of poverty.
Reeves said the government is creating “the biggest reduction in child poverty” since records began.
The Resolution Foundation think tank said, “The chancellor has now managed [$90 billion] of tax rises in her first two budgets.”
It calls the budget “the biggest double-whammy from a newly elected government since the [$83.3 billion] of tax rises in 1993.”
Conservative shadow chancellor Mel Stride called the new budget a “smorgasbord that’s turned out to be a bit of a dog’s breakfast.”
He told reporters that “about 43 different tax increases” will be “borne by hardworking people up and down the country.” He called on Reeves to resign.
Kemi Badenoch, Conservative leader, said in a statement: “This Labour benefits street budget is a total humiliation — and a total betrayal of the British people. Labour promised not to raise tax in their manifesto. Then, when Rachel Reeves broke that promise last autumn, she assured us she wouldn’t be back for more. Now, instead of showing some backbone and getting spending under control, Reeves has launched a welfare splurge and paid for it by hiking taxes on working people.”
The budget also raises the Remote Gaming Duty from 21% to 40%, the online betting tax from 15% to 25%, while keeping the horse racing tax at 15%. The Bingo Duty is being removed entirely. There will also be new taxes on electric cars to pay for road work.
“This will be payable each year alongside vehicle excise duty at [4 cents] per mile for electric cars and [2 cents] for plug-in hybrids.”
Reeves said it will double road maintenance funding and offer $265 million to build electric charging stations.
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