Its calculations suggest that Reeves would see a £6bn boost in the public purse, which could ease the damage she faces to her headroom at this year’s Budget in light of higher borrowing costs, expected growth downgrades by the Office for Budget Responsibility and policy U-turns on welfare. «The biggest risk to food prices would be to include large shops – including supermarkets – in the new surtax on large properties,» BRC chief executive Helen Dickinson said. Meanwhile, Ms Reeves has been urged to freeze alcohol duty in the upcoming budget and not increase the rate of excise tax on alcohol until the end of the current parliament. Another proposal by the think tank would see a gradual lowering of the threshold at which businesses pay VAT from £90,000 to £30,000, as this would help «promote fair competition» and raise £2bn by the end of the decade.

Rachel Reeves told to cut national insurance and raise income tax to gain £6bn

Further taxes on sugary and salty food, long-haul flights, shipping and heavier vehicles would raise billions more, the report claims. The Resolution Foundation, once the workplace of Treasury ministers Torsten Bell and Dan Tomlinson, has given credit to former Chancellor Jeremy Hunt for having “rightly identified an unfair double tax on work” as he cut the tax by two percentage points in last spring Budget. A Treasury spokesperson said there will be no export duty, lower licensing fees, reduced tariffs, and a cap on corporation tax to make it easier for British distilleries to thrive. A Treasury spokesperson said in response to the think tank report it does «not comment on speculation around future changes to tax policy». He added that while any tax rises are «likely to be painful», Ms Reeves should do «all she can to avoid loading further pain onto workers’ pay packets». Johnson also told Times Radio today that parts of Labour’s manifesto would have to be broken to fulfil the government’s promise of growing the economy.

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The Resolution Foundation also said the Chancellor could extend employers’ national insurance to limited liability partnerships, which can include large law firms, and raising taxes on dividends. «Policy U-turns, higher borrowing costs and lower productivity growth mean that the chancellor will need to act to avoid borrowing costs rising even further this autumn,» Mr Corlett said. “They would raise significant amounts of money as well, employer national insurance, one penny gets you something like £16-17 billion a year. This calculation was working on a series of increases, which sees the new top band go from the current situation where it is double the lowest band A to up to 12 times that level instead for the most expensive properties. Tax reforms set out in the Resolution Foundation’s report may not altogether rebuild Reeves’ headroom given City estimates suggesting she will have to raise at least £25bn.

Meanwhile, a landlord national insurance contribution plan has been proposed by the Resolution Foundation think tank, whose former director, Torsten Bell, is now a Treasury minister. The Bank of England left the interest rate unchanged last week amid fears that rising food prices were putting mounting pressure on headline inflation. The think tank, which used to bcap token price be headed by Torsten Bell, a Labour MP who is now a key aide to Ms Reeves and a pensions minister, said the move would help to address «unfairness» in the tax system.

His comments come as Labour kicks off its international investment summit this week in a bid to attract more business proposals to the UK. Johnson also suggested the real-life impact of such an increase on individual employers would probably be relatively small. It said a reduction in the threshold would “stop small firms from bunching” below it and raise an extra £2bn for the Treasury. Adam Corlett, principal economist at the Resolution Foundation, said the move could alleviate some of the pressures faced by Reeves while workers’ salaries would be protected.

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Asked whether employers’ National Insurance will go up, the prime minister’s spokesman said he would not comment on “speculation”. The IFS chief suggested while such investment is “absolutely vital for the economy”, he cast doubt on just how much of an effect it would have. Business secretary Jonathan Reynolds appeared to confirm speculation that Rachel Reeves will increase the employers’ part of National Insurance on October 30.

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Instead, the chancellor has been told by leading think tanks that, if she wants to maintain her spending plans and fiscal rules on borrowing, she will likely have to raise income tax, VAT or employee national insurance – breaking one of Labour’s key manifesto pledges. The Resolution Foundation has suggested these changes should include a 2p cut to national insurance as well as a 2p rise in income tax, which Adam Corlett, its principal economist, said «should form part of wider efforts to level the playing field on tax». Rachel Reeves has been warned she faces having to break Labour’s manifesto pledge not to increase taxes on working people after leading economists said “fiddling around” with smaller taxes – like a mansion tax and a gambling levy – would not be enough to fill the black hole in the Budget. Rachel Reeves has been urged by a think tank to cut national insurance and increase income tax to create a «level playing field» and protect workers’ pay. Chancellor Rachel Reeves has been told to cut national insurance for workers by two per cent and raise income tax by the same amount, with economists at a left-leaning think tank claiming a £6bn gain in revenue could be made. Researchers at the influential think tank have now urged Rachel Reeves to go one further and potentially break a key manifesto pledge not to raise income tax.

• The IFS chief suggested while such investment is “absolutely vital for the economy”, he cast doubt on just how much of an effect it would have.
• «The biggest risk to food prices would be to include large shops – including supermarkets – in the new surtax on large properties,» BRC chief executive Helen Dickinson said.
• Another proposal by the think tank would see a gradual lowering of the threshold at which businesses pay VAT from £90,000 to £30,000, as this would help «promote fair competition» and raise £2bn by the end of the decade.
• But Professor Stephen Millard, deputy director of NIESR, warned that to tackle the huge gap in public spending, Ms Reeves will have to consider the three big taxes – income tax, VAT and national insurance.

Another fail for Rachel Reeves as doom-laden warnings beset UK economy

Labour would break a key election manifesto pledge if it goes ahead with a major tax hike in the Budget, according to a leading think-tank. It could raise £2bn in revenue, but again could end up being passed on to tenants or get landlords to sell up in a market that is already under pressure. Goldman Sachs has suggested further tax hikes would fail to stabilise public finances, with cuts to welfare spending likely to be judged more positively by bond traders. The Resolution Foundation also recommends increasing the tax on dividends, addressing a «worrying» growth in unpaid corporation tax from small businesses, applying a carbon charge to long-haul flights and shipping, and expanding taxation of sugar and salt. According to The Times, the mansion tax plan would mean higher-rate taxpayers paying 24 per cent of any gain in the value of their home, while basic rate taxpayers would be hit with an 18 per cent levy. He suggested the other option was reducing welfare or spending cuts, but noted the political problems within the Labour Party made that more difficult.

• Rachel Reeves has been warned she faces having to break Labour’s manifesto pledge not to increase taxes on working people after leading economists said “fiddling around” with smaller taxes – like a mansion tax and a gambling levy – would not be enough to fill the black hole in the Budget.
• Leading economic think tank, the National Institute of Economic and Social Research (NIESR), has estimated that Ms Reeves will be faced with a £41.2bn black hole at her next Budget this autumn.
• The bodies are also urging Ms Reeves «to ensure there will be no further widening of the tax differential between spirits and other alcohol categories».
• Johnson also told Times Radio today that parts of Labour’s manifesto would have to be broken to fulfil the government’s promise of growing the economy.

The government has repeatedly insisted it will keep its manifesto promise not to raise income tax, national insurance or VAT. “This should form part of wider efforts to level the playing field on tax, such as ensuring that lawyers and landlords face the same tax rates as their clients and tenants. They said that a further two percentage point cut to national insurance paid by workers on the payroll could be supported by a two per cent hike on income tax, which is also paid by pensioners, landlords and self-employed workers. He noted Ms Reeves has also committed to freezing the fourth biggest tax, corporation tax on businesses, while options like fuel duty are less attractive than they were because they raise less money with the decline in petrol and diesel cars. But Professor Stephen Millard, deputy director of NIESR, warned that to tackle the huge gap in public spending, Ms Reeves will have to consider the three big taxes – income tax, VAT and national insurance.

The gambling tax championed by former PM Gordon Brown, after being drawn up by the Institute for Public Policy Research (IPPR), may raise around £3.2bn extra per year. During the Spending Review earlier this year, she had headroom of just around £10bn, according to the Institute of Fiscal Studies (IFS), but economic problems caused by wars and Donald Trump’s tariffs have left the UK economy vulnerable. Leading economic think tank, the National Institute of Economic and Social Research (NIESR), has estimated that Ms Reeves will be faced with a £41.2bn black hole at her next Budget this autumn. The warning has been led by Lord Jim O’Neill, the economist, former Treasury minister and ex-Goldman Sachs chairman, who was brought in by Ms Reeves as a top adviser. In a report detailing a number of possible tax policies to be considered by the Treasury, researchers also called for the VAT threshold of £90,000 to be gradually lowered over time to £30,000. The bodies are also urging Ms Reeves «to ensure there will be no further widening of the tax differential between spirits and other alcohol categories».