Chancellor tipped to introduce new 'sin taxes'

RACHEL Reeves is set to hit British consumers with extra “sin taxes) leading forecasters have predicted, which are widely seen as regressive taxes that could hit people on lower incomes.

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The Chancellor faces having to raise £20bn in taxes at this year’s Autumn Budget to restore her “already paltry” margin of £9.9bn in headroom, according to Pantheon Macroenomics. Its UK economists, Robert Wood and Elliott Jordan-Doak, said the costs incurred from U-turns on welfare savings and lower tax receipts than expected could erode her fiscal buffer.

They said Reeves could look to “sin taxes’, which could include adding levies on gambling and junk food, to rebuild her buffer, while a “stealth tax” by extending a freeze on income tax thresholds could help her fill an estimated £13bn fiscal hole.

Axing the two-child benefit cap, which would cost around £3.2bn, could lead to higher costs for the government.