Tax Shift: UK's Financial Chief Eyes Income Tax Hike

In a move that could reshape the UK's tax landscape, Finance Minister Rachel Reeves is reportedly considering a significant income tax increase. This proposal is part of a broader strategy to meet fiscal targets and address economic challenges. The plan involves raising income tax by 2 pence while simultaneously cutting National Insurance contributions by a similar amount. This shift aims to redistribute the tax burden, potentially affecting pensioners and landlords more heavily. Economists suggest this change could generate over 6 billion pounds annually. The proposed adjustments include a cap on National Insurance cuts for earnings below 50, 270 pounds, further complicating the tax structure.Reeves' office has not yet commented on these reports. However, the inclusion of these measures in the government's submission to the Office for Budget Responsibility indicates serious consideration. The finance minister has hinted at a departure from Labour's election pledge to avoid major tax hikes. She emphasized the need for collective effort to sustain public spending and avoid austerity, citing high debt levels and persistent inflation. A think tank, the National Institute of Economic and Social Research, has called for measures worth 50 billion pounds to tackle these economic issues.