Chancellor Rachel Reeves Faces Calls to Break 50-Year Tax Taboo

Experts suggest raising the basic rate of income tax in the autumn Budget as fiscal pressures mount and borrowing constraints tighten.

The Institute for Fiscal Studies' Paul Johnson has urged Chancellor Rachel Reeves to consider raising the basic rate of income tax for the first time since 1975 to address severe fiscal challenges.
Raising the basic rate by 1% could generate £8 billion annually, while a 2% increase could raise over £16 billion, according to expert estimates from Blick Rothenberg.
Reeves is constrained by fiscal rules prohibiting borrowing for day-to-day spending, leaving her to choose between higher taxes or deep spending cuts in her upcoming Budget.
The last increase to the basic rate of income tax was introduced by Denis Healey in 1975 during an economic crisis marked by high inflation and unemployment.
Experts warn that while politically sensitive, raising the basic income tax rate may be less economically damaging than alternative measures, such as further spending cuts or extending tax threshold freezes.