Rachel Reeves swears she won’t hike income tax, NI or VAT – really? | Personal Finance | Finance

During the election campaign, Reeves and PM Keir Starmer insisted they wouldn’t hike taxes on “working people” if elected.

Then in her first Budget, Reeves hiked employer’s National Insurance (NI) contributions by a stunning £25billion.

If employer’s NI isn’t a tax on “working people”, I don’t know what is.

While it hits employers first, it’ll trickle down to workers, in the shape of higher prices, lower wages and fewer jobs.

Reeves also targeted inheritance tax on pension pots that haven’t been spent before death – usually built up by people working in actual jobs.

She’s also bringing more farmers and small business owners into the IHT net. These are some of the hardest-working people in the country.

The Chancellor may not be able to bang the UK economy into shape, but she can twist words until they mean whatever she wants.

So we have to listen very carefully to today’s announcement. Because there’s a real danger she’s doing it again.

This morning, Reeves recommitted to her pledge not to increase taxes on working people. That’s already arguable, but we’ll leave that for now.

So what does that mean?

Pressed on whether Labour’s manifesto promises were at risk due to the dire state of the public finances, Reeves said they were “fully funded, fully costed” and Labour was in a position to deliver.

Then came the important bit.

She said that included “not increasing the taxes that working people pay”.

Then, sensing that sounded a bit too sweeping, she refined it to “the key taxes working people pay – income tax, National Insurance and VAT”.

That’s a subtle but important shift. She knows full well she’s already been accused of breaking her tax promises. So this new line narrows the focus to just three big levies.

To be fair, these are the taxes most people worry about. They’re also the ones economists predicted she might have to hike, possibly by extending the income tax threshold freeze to 2030.

Apparently, that’s now off the table. Make a note of that please. I certainly have.

Nobody expects a UK Chancellor to lie, but Reeves has already been accused of doing just that. More than once. In fact I made a list, just to remember.

But today, she was crystal clear. Asked again for a firm commitment, she said: “The commitments that we made in the manifesto not to increase the key taxes that working people pay… are promises that we stand by.”

If she hikes income tax, NI or VAT this autumn, that statement will come back to haunt her.

Let’s hope it doesn’t. But even if she sticks to it, plenty of “non-key” taxes are still on the table.