Which taxes might Reeves raise to fill £22bn hole?

Rachel Reeves appeared to pave the way for significant tax increases in a major pre-Budget speech, as she said “easy answers” were off the table.

- ALBERT TOTH

It is the starkest warning yet from the chancellor, who has been signalling over the past few months that hard choices will have to be made. Many economists predict that substantial tax rises can be expected in the Budget, as Ms Reeves looks to counteract the country’s ailing economic performance.

Researchers from the Institute for Fiscal Studies (IFS) have found that the chancellor will need to find at least £22bn to make up a shortfall in the government's finances, as rising borrowing costs and weak growth forecasts drastically reduce her room for manoeuvre. Speaking from Downing Street yesterday, Ms Reeves said: “Politicians of recent years have become addicted to shelling out for short-term sticking-plaster solutions rather than making long-term economic plans.”

Adding further fuel to speculation is the seeming reluctance from No 10 to recommit to Labour’s manifesto pledges not to raise the headline rates of income tax, VAT or national insurance contributions. As the three largest revenue sources of tax revenue, economists have pointed out that this decision has limited the chancellor’s options. Her recent remarks may hint at an intention to at least partially row back on the commitment, in light of difficult economic circumstances.

Here are some of the other options the chancellor may be considering ahead of the Budget on 26 November:

Tweaking VAT

The passive language on Labour’s tax commitment has led to some speculation that the chancellor may be looking at some type of increase to VAT.