Reeves urged to reverse ‘rash’ tax commitments and reform system by think tank

Rachel Reeves should “reject the path of least resistance” and consider rowing back on her “rash” tax commitments at the Budget, a leading think tank has said.

The Institute for Government (IfG) said Labour’s “unrealistic” approach to tax has left the Chancellor reaching for “piecemeal changes”.

The Government has repeatedly said it will not increase the rates of VAT, income tax or national insurance at the Budget in November.

A report by the think tank calls on Ms Reeves to undertake serious tax reform, instead of reaching for an “eclectic grab bag of tax raisers”, which could further complicate the system.

It comes after the Resolution Foundation proposed a 2p cut in national insurance, matched by a 2p rise in income tax, to create a “level playing field” and protect workers’ pay.

IfG deputy economist Tom Pope said: “This autumn, the Chancellor finds herself in a difficult position.

“With tax rises all but inevitable, she should reject the path of least resistance, often taken by her predecessors, of raising taxes in an inconsistent way based on what seems easiest.

“Instead, now is the time to commit to tax reform and lay out an agenda on tax that fits with her broader growth objectives.”

The IfG report, 2025 budget and beyond: How Rachel Reeves can approach tax reform to help drive growth, also warns that the introduction of a wealth tax would be difficult.