Labour confirm ‘tax rises’ will remain after election

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Labor will maintain Conservative plans for income tax thresholds to remain frozen if it wins the election, the shadow business secretary has said.

Jonathan Reynolds told the BBC he needed to be “frank” that Labor would continue with its plans. Saying it is a “tax increase.”

The freeze on the personal allowance – the amount of money you can earn before you start paying any tax – is already set to last until 2028.

His comments come amid an ongoing row over Mr Sunak’s claim that Labour’s plans would mean “£2,000 higher taxes for every working family in our country”.

This figure was based on assumptions about Labor spending divided by working families over four years.

But the conservatives stuck to the comment.

During the BBC election debate on Friday, Conservative Minister Penny Mordaunt said: “Keir Starmer confirmed it earlier this week – they will raise taxes by £2,000 per working family.”

“That’s a lie,” Labor deputy leader Angela Rayner responded, adding that the government had raised taxes to a “record level.”

Business plans

Shadow Chancellor Rachel Reeves had previously described the government’s decision to freeze income tax thresholds as “pocketing” the working class.

But in the run-up to the election, Labor pledged to maintain the government’s tax and spending plans. Create a “financial lock” Require forecasts from the Office for Budget Responsibility for any major changes.

Currently, no income tax is payable on the first £12,570 a person earns – known as the ‘personal allowance’.

Economic think tank the Decision Foundation said plans set out in the latest Budget amount to a series of tax rises that will cost the average household an extra £800 a year by 2028-29.

The largest increase will be a result of the continued freeze of all income tax thresholds, not just personal benefits. Income tax thresholds have not risen with inflation since 2021 and are likely to remain flat until 2028.

A separate think tank, the Institute for Fiscal Studies, warned that this would push an extra 4.5 million people into higher income tax thresholds by 2028.

On Saturday, Ms. Reeves avoided answering whether she agreed with Reynolds that keeping tax thresholds frozen amounted to a tax increase.

Instead, Ms Reeves said: “I want taxes on working people to be as low as possible.

“Under the Conservatives, the tax burden is at its highest level in 70 years. That is why I have pledged not to increase income tax, National Insurance or VAT.”

Appearing on the BBC Breakfast program on Saturday, Reynolds admitted Labor would go ahead with the government’s decision to freeze the thresholds.

“If we form a government after the general elections on July 4, we will inherit the government’s spending plans,” he said.

“Now, I’ll be honest, there are tax increases in those plans. I mean, the personal benefits that we all get from our income tax, which are scheduled to be frozen for several years.

“So, we are ambitious about how we think we can grow the economy to give people better times in the future, but I will be frank and say these are the plans that we will inherit,” he added.

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