London (Parliament Politics Magazine) – Chancellor Rachel Reeves vows to create a tax system that keeps wealth creation and investment but cautions decisions will ‘not always be easy’
The Chancellor has given the clearest indication yet that businesses will face a hike in National Insurance contributions in the Budget later this month. Rachel Reeves promised to create a tax system that supports wealth creation but cautioned she faces “difficult choices” ahead of the Autumn Statement on October 30.
At the International Investment Summit in London, Ms Reeves told leaders from the world’s biggest businesses that British economic instability had concluded and the new Government was bringing investment and employment back to the UK. She continues to face inquiries about which taxes she will raise in advance of her first Budget after ministers have repeatedly declined to rule out increasing employer National Insurance Contributions (NIC).
What challenges does chancellor reeves face in tax reform?
Ms Reeves told journalists at the summit in the City of London that there would be no growth in investment unless the Government could soothe the markets that it offered stability. Indicating that employer NICs were in her sights, Ms Reeves stated: “We were clear in our manifesto that we weren’t going to grow the key taxes paid by working people: income tax, national insurance and VAT and, on the business side of responsibility, that we would check corporation tax at its current rate of 25 per cent which was the lower in the G7 and we will stick to the promises we made in our manifesto.”
However, she said: “But you know that there’s a £22billion black spot over and above anything that we understood about going into the election that we need to serve, and that’s not just for one year, but that continues throughout the forecast period. The precondition for bringing investment into a homeland is economic and fiscal stability. So we are going to need to complete that gap between what the Government is expending and what you’re bringing in through tax receipts.”
She contended: “I understand that for every business, resilience is the foundation of success. In the next fortnight, I will be completing my first Budget as Chancellor of the Exchequer and the situation that we have inherited suggests that we face difficult choices.”