Tories warn of Labour tax ‘bombshell’
LABOUR will “kill growth” and derail Britain’s recovery if the Government hikes up taxes, leading Conservatives have warned ahead of Rachel Reeves’s landmark statement in the Commons tomorrow.
Tories believe the Chancellor is preparing the ground for a tax “bombshell” that will be dropped in the upcoming Budget.
Labour says “Britain is broke and broken” and Ms Reeves will “reveal the mess that populist politics has made of the country”.
But Shadow Chancellor Jeremy Hunt warned: “Their motive is clear. Having promised not to raise taxes 50 times before the election they now need a pretext – but trying to scam the British people so soon after being elected is a high-risk strategy doomed to fail.”
He insisted Britain has a “healthy, growing economy” and accused Labour of peddling a “fiction”.
Shadow Chief Secretary to the Treasury Laura Trott, writing in the Sunday Express, said businesses, families and pensioners will be caught “dangerously offguard” by Labour’s “new economic agenda”.
She added: “Such a move will kill growth, stifle investment and hamper competitiveness – delivering a hammer blow to our now recovering economy and putting at risk all of the hardfought progress we’ve made.”
Shadow security minister and Tory leadership contender Tom Tugendhat said: “The truth is clear – Labour hid their plans to put tax up and now they’re already back to their old ways of higher taxes, more spending and more control over people’s lives. Five years of this will cause untold damage to our country.ten years would be a national disaster.”
But Labour’s Pat Mcfadden, Chancellor of the Duchy of Lancaster, said: “After 14 years of Conservative failure, the Labour Party is calling time on the sticking-plaster politics of populism. The electorate sent this changed Labour Party to government with a clear mandate to restore economic stability, grow the economy and build the homes we need.
“We will not shy away from being honest with the public about the reality of what we have inherited. We are calling time on the false promises people have had to put up with and we will do what it takes to fix Britain.”
Ms Reeves is expected to claim there is a £20billion hole in the national finances, which could lead to delays for road and hospital schemes. However, it is said she is “likely” to meet the recommendations of independent pay-review bodies that public sector workers should receive above-inflation wage increases of 5.5 per cent in 2024-25.
James Price, of economic policy think-tank the Adam Smith Institute, said: “In the absence of high growth, spending cuts or aggressive borrowing, we could be looking at imminent tax hikes.”
Ms Reeves has ruled out raising VAT, income tax or national insurance but it is feared hikes in inheritance tax or capital gains tax could be coming.
John Longworth, former director-general of the British Chambers of Commerce and chair of the Independent Business Network, said: “Labour’s determination to raise taxes is a direct move against growth – the very thing the Chancellor put first and foremost before the election.” And he said increases to inheritance tax could damage family businesses, while higher capital gains tax would put off investment
Daniel Herring, of the Centre for Policy Studies, said: “Hiking taxes will squeeze further life and vitality out of the economy when taxes are already at a post-war high. It will also do nothing to fix the underlying poor performance of public services, for which we are paying more and getting less.”
And Tom Clougherty, of the Institute of Economic Affairs, said: “There is no surprise black hole – all of these spending pressures were well known in advance.
“It’s a simple question of whether the Government favours fiscal restraint or higher taxes.we will find out soon enough.”