"The chancellor is in active discussions over breaking one of her party's main manifesto pledges as she looks for ways to clear an estimated shortfall of more than 30bn, according to three sources close to the budget process. Some advisers in the Treasury and No 10 believe that raising income tax might be the only way to make sure she raises enough money never to have to come back for tax rises again in this parliament."
"However, Reeves is understood to be nervous about the political consequences of such a major abandonment of the party's previous pledges, especially given she broke them to raise national insurance last year. The Treasury is also torn over which rates it could raise. One source said Reeves is considering adding 1p to the basic rate, which would garner more than 8bn. However, doing so is likely to add to concerns about the cost of living."
Chancellor Rachel Reeves is considering raising income tax at next month's budget to address an estimated shortfall of more than £30bn. Advisers in the Treasury and No 10 view an income tax increase as the most reliable way to raise sufficient revenue and avoid further rises during this parliament. Reeves is nervous about abandoning manifesto pledges after last year's national insurance increase. Options under consideration include a 1p rise in the basic rate, which would raise over £8bn, or increases to the higher and additional rates that would raise about £2bn and £230m respectively. Debate continues over desired fiscal headroom above the previously planned £10bn.
Read at www.theguardian.com
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