‘The fairest way’ or a ‘political disaster’? Readers split on whether Reeves should raise income tax

Independent readers are sharply divided over whether Keir Starmer and Rachel Reeves should raise income tax to help fill the £50bn shortfall in the public finances this autumn.

Some see it as the fairest option, targeting those most able to pay. “A penny or two on the rates of income tax might just work wonders,” said one, while others argued it is long past time to align capital gains with income tax rates or reform property taxes.

Opponents warn that raising income tax could damage growth and hand political advantage to Reform leader Nigel Farage. “A rise in income tax across the board would be a political disaster for Labour,” cautioned another.

Some prefer alternatives such as VAT, targeted wealth taxes, or cutting waste before hiking any taxes.

Several also pressed for bold investment in green infrastructure and small businesses, but all agreed the government must find a credible way to fund public services.

Here’s what you had the say:

What choice does she have?

Really, what choice does she have? It is hardly surprising the economy is so sluggish and she has gaps to plug from the effects of a disastrous Brexit (it was: really), a pandemic, and a clueless previous administration, who, to be fair to them, also had limited choices.

Among the solutions is to slaughter the sacred cow of putting up income tax. A penny or two on the rates of income tax might just work wonders and could be the fairest way of generating revenue from those best able to contribute towards the public good.

DIRKCUTLASS

Those with the broadest shoulders

As always, the disabled are blamed as the culprits upsetting Reeves’ books. The welfare climbdown can only be attributed to £5bn when Reeves’ calculations are in the region of £50bn. She and Starmer need to come clean and articulate the hangover of Covid furlough, problems caused by Ukraine and Trump, and put up taxes across the board – such as freezing allowances, increasing income tax and national insurance, equalising capital gains tax with income tax and making it liable for NI, reforming council tax on high-value properties.

Starmer and Reeves need to be making sure those with the broadest shoulders bear their fair share of the burden.

Kernow

What do you think – should Rachel Reeves raise income tax, or find the money elsewhere? Share your thoughts in the comments below.

VAT is the better option

Why income tax? VAT is the much better option as it is a consumption tax. It is easy to adjust for – you raise the tax-free threshold for the poorest in society to compensate. It doesn’t affect business significantly. As it taxes consumption, this encourages saving and investment.

Kwame

Tax unearned income

Tax unearned income in line with income tax brackets. This would be worth £16 billion a year. Stop subsidising private companies completely. Apply a void tax to all properties empty for more than six months. Introduce a system whereby renovations etc. are exempt. Some savings ideas – centralise all NHS procurement and HR. Have a locum register for nurses and stop using expensive agencies (same salaries for temp nurses, though).

Slightly Tipsy Max

Align capital gains tax with income tax

Since the wealthy get most of their income from gains, why not align capital gains tax rates to income tax rates, as is done in Australia? That would bring in around £8 billion a year.

In addition, replacing council tax and stamp duty with a French-style proportional property tax could generate an additional £3bn–£4bn per year, with even more potential under a land value tax framework. There’s plenty of scope for a chancellor and a prime minister who aren’t afraid of their own shadows.

Pomerol95

Cut waste before raising taxes

Still no sign of any reduction in government wasted expenditure – now in the billions each month. No use Starmer looking serious about income tax rises. He refuses to act to curb expenditure or legislate for change!

SPCK

Political disaster for Labour

A rise in income tax across the board would be a political disaster for Labour. Farage would walk into No. 10 on the ticket of “never believe Labour’s promises”.

fastyellosaab

No changes to basic rate expected

The last UK Chancellor to increase the basic rate of income tax was Denis Healey back in 1975. Do not expect any changes to the rate, even though it would actually be the fairest way to raise revenue.

Expect tinkering with allowances and other tax measures, which are easier to “sell” politically.

Blackkbeard’s host

People fear job loss more than a tax rise

Really? Does anyone worry like that – that their income tax might go up by 1 per cent or they may have to pay a bit more for petrol? That’s not what keeps people awake at night when there are so many worse possibilities, like being made redundant and having no income at all, which could happen to most of us at any time.

Chrisw27

Commitment to growth needed

Sorry, but what does stabilising the economy mean? Jobs, SMEs, house prices are falling like there’s no tomorrow. Extra taxes are not going to make things better. We need a government committed to growth – massive projects to get us a green new economy that will create jobs and prosperity. Support for SMEs to grow faster.

Conversations about big hard issues like how do we pay for the NHS in a world of an ageing population, and where the care is going to come from. Instead, we have a continuation of business as usual. I challenge myself to see one policy that is different to what we would have if Rishi were in power. I struggle.

Boring75

Taxes rises should have been in the manifesto

Good news – there should have been tax rises in the manifesto.

You can’t have good public services run on fresh air and, after fourteen years of Tory rundown – particularly of the NHS – there is much repairing to do, given that Tory taxes were almost all paid to their mates rather than into public services. Evidence? Just look at the state of the water service and supply “industry”. Let’s see it brought back into public control.

rEUjoin

High taxes in the 1970s

In the 1970s, Labour raised income tax to 83 per cent for top earners; the rest paid 33 per cent or more. Bin men went on strike (like Birmingham today). Doctors wanted more pay. Train drivers struck. Does this start to sound familiar?

Karl

Hurting the poorest

Just like raising employers’ NIC was obviously going to impact the poorer working person, so will raising VAT.

Wealthier people can afford to pay more; poorer people can’t – and it matters not if you take more of their wages or make them pay more for their goods, the result is the same to the poor.

Pen2030

Tinkering won’t fix deep problems

Starmer and Reeves think tweaking things here and there – a few extra billion in taxes, a few billion less in welfare spending – will sort the finances and the UK economy. No. The problems run deep and require more positive actions than Starmer and Reeves are willing to take. So the UK economy will continue to stagnate. More and more voters will lose faith and look elsewhere.

ChrisMatthews

Find efficiencies before tax rises

Why does Starmer not encourage a government efficiency (oxymoron, I know) drive – cutting waste in all departments? Sell off unused government land or buildings. Try to look at other ways of filling holes, PM, before making another U-turn on a promise not to raise taxes. All the other tax increases in place since Labour took over to fill the black hole – where’s that increased income gone? Face it, the UK government hasn’t got a clue.

Chuckiethebrave

Some of the comments have been edited for this article for brevity and clarity.

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