Sir Keir Starmer has issued a warning on Tuesday that there could be tax hikes and the October budget is “going to be painful.”
Starmer has said there will also be spending as “things are worse” than what “we ever imagined.”
Speaking from the rose garden at Downing Street Starmer suggested that the highest earners could end paying more in tax, he said, “Those with the broadest shoulders should bear the heavier burden.
“Those who made the mess should have to do their bit to clean it up.”
He added, “I will be honest with you, there is a budget coming in October and it’s going to be painful.”
The government is softening voters up for a tax-raising budget in October.
There is obviously a tension between raising revenue and prioritising wealth creation, and that will be especially pronounced when increases to the main, broad-based taxes – income tax, national insurance, and VAT – have been ruled out.
The remaining possibilities – higher taxes on business, on savings, and on investment – are likely to have an outsized impact on growth, and as a consequence may not generate as much revenue as the government expects.
It is also important to remember that the incidence of a tax doesn’t always fall on the person who pays it. Workers usually lose out when corporation tax is increased, for example. Significant tax increases that don’t affect ‘working people’ are a fantasy.
