Voices: ‘Tax the wealthy, not the workers’: Readers divided on how Reeves should tackle £20bn Budget blackhole
With the Budget looming and a funding gap of up to £20bn, Independent readers have weighed in on how Rachel Reeves should adjust taxation. According to the latest reports, the chancellor faces the prospect of raising income tax while cutting National Insurance (NI) on 26 November, as she seeks to balance the books.Many readers argued that a modest rise in income tax, particularly for wealthier earners, would be the fairest approach – especially if paired with a reduction in NI to support lower-paid workers and smaller employers. Others expressed concern for pensioners and those on low incomes, warning that even a 2p hike could reduce take-home pay and undermine the value of the triple lock.Several highlighted the difficult choices Labour faces: while taxing savings, capital gains, property, or VAT may be politically appealing, these measures risk stifling growth and investment. Some suggested alternative approaches, such as a wealth tax or simpler reforms – cutting bureaucracy, streamlining VAT, or abolishing stamp duty – to raise revenue without harming productivity.Here’s what you had to say:The fairest way to raise revenueRaising income tax, especially for wealthier people, would probably be the fairest way to bring in more revenue. And if a 2p rise in income tax were offset by a 2p reduction in NI, that would help lower-paid people and a lot of smaller employers. The government needs to raise taxes for those who can afford it, in order to begin improving the British economy, which has been left in a terrible state because of Brexit and the actions of the Conservative governments over 14 years.Get a free fractional share worth up to £100.Capital at risk.Terms and conditions apply.Go to websiteADVERTISEMENTGet a free fractional share worth up to £100.Capital at risk.Terms and conditions apply.Go to websiteADVERTISEMENTclarstarOne mistake too manyIf, as the article says, she will also cut National Insurance by 2 per cent, I think it is a good idea. Raising NI was a big mistake as, on top of hampering our growth, it also brought inflation and a rise in jobless people. A 2 per cent rise in income tax will be very unpopular and will also hamper growth, but will not hit inflation and jobless figures as much.It arrives at a bad time, though, as we learn today that she is pocketing £3,200 a month in rent while living for free on taxpayers’ expenses – and to make it worse, she was doing it without the proper paperwork. I wonder if Starmer and Rayner have heard of “one mistake too many”. With them, “a new scandal is revealed before the one before is finished”. For a trio who wanted to bring back confidence in politics, it is a bit rich – they are as dubious as the Tories they were so vehemently criticising.paulTaxes are necessaryA week’s a long time in politics, and also in economics.I’d be happy to pay 2p more to see real improvements.I don’t see tax as something out of Halloween, but a pragmatic and necessary part of living and death.Paige TurnerWe have been living on borrowed timeAs your recent Independent View piece argued, it really is just about the only option.We have been cosseted for years on this. Basic rate tax has never been lower. It was 41.25 per cent in 1970, and successive governments from both parties gradually brought it down to 20 per cent by 2008. Since then, we have also seen major increases in the personal allowance, which was £5,225 in 2008, making the comparison even more stark.Unfortunately, we also had a huge economic shock in 2008 – the financial crash. And since then, we have been living on borrowed time and stupendous amounts of borrowed money, in some kind of fiscal fantasia where we never need to balance the books. And yes, the Tories were in charge for most of the time since then.I don’t see any alternative, and I very much doubt if the government does.SteveHillWhat will Scotland do?I wonder what Scotland will do? Holyrood already has control over income tax rates and has more tax bands and higher tax rates than the rest of the UK.But National Insurance rates are not a devolved function – they apply across the UK – so if Rachel does reduce NI rates by 2p, then potentially Scottish taxpayers will benefit.Although it is more likely that the Scottish executive will similarly raise their taxes, there may come a point when those taxes are seen to be overly onerous and will lead to an accelerating departure of high-paid workers to more tax-friendly regimes.DaveAniPensioners will lose outIf the freeze on the tax allowance remains, and pensioners and others have income tax raised by 2p, then it will mean that all those on very low incomes will have substantially less take-home pay to meet the necessary expenses in their lives, such as heating and food.Pensioners have already paid for their pensions in their working lives by paying National Insurance, so it cannot be claimed as some kind of “advantage” for them. No other country with a social security system expects the aged to go on paying for schemes that are supposed to be funded during a working lifetime.At the same time, this will directly undermine the value of the triple lock, which was introduced to bring British pensions up to the levels currently enjoyed by most other people in Europe.If Labour pursue this course, they will rapidly lose the pensioner vote – as well as those of all the others they have already lost.Adrian FoxLabour are doomedLabour are doomed. They can do the right thing and be wiped out, or they can do nothing and be wiped out, or do the wrong thing and be wiped out.The right thing: So – make VAT universal at a much lower rate. That will raise billions and means a third of the tax code can be removed, freeing up 50 million hours a year for something useful rather than compliance and tax collection.She could also get rid of around 12,000 HMRC employees. A 22–23p basic rate.Increase benefits by CPI – 0.2% per year for anyone not physically incapacitated or profoundly mentally ill, or suffering a sensory issue (blind/deaf).The triple lock should be CPI-only unless growth allows it to be activated.Then she has to turn her attention to helping businesses with a flat per square metre charge regardless of rentable value (imagine using rentable value! That just makes an expensive property more expensive) regardless of business type – this levels the playing field and reduces even more complexity, though admittedly would increase inflation a little.Remove stamp duty from buying and selling homes as it’s gumming up the market, and secondary positive effects (employment, VAT, white goods sales, etc.) are not occurring.Then she needs to cut the civil service headcount.And if she and Starmer can’t get this sensible and necessary package through Parliament, it needs to be dissolved and another general election held – or we will have a fiscal crisis and the IMF will arrive, and the cuts will be a lot worse. Just see what happened to Greece and Spain.The wrong thing: Not doing the above.9DiamondsTax the wealthy, not the workersWe do need that wealth tax urgently. If 1 per cent on total assets over £5 million is not enough to plug the revenue gap, how about 5 per cent on wealth above £10 million? 10 per cent above £20 million?There’s so little productive “work” going on in the UK it feels a bit terminal to keep squeezing workers for more or freezing their earnings allowance for another century. Maybe it’s time to stop tinkering and return to economic sovereignty – maybe even build some UK infrastructure again?Let’s try something radical and embrace meritocracy instead (i.e. the ability of those with the most to make the greatest contribution).questioningThe taxman takes too muchRising taxes up and up and up will only result in lowering tax revenue and damaging our economy further (and it’s already almost on its knees because of Brexit and terrible economic management in the last 10 years). At the end of the day, nobody will work more efficiently if the only result of that work will be the taxman taking most of your hard-earned cash away. It’s no longer a fair tax system – it’s more like mob racketeering.Grumpyoldman38Some of the comments have been edited for this article for brevity and clarity.Want to share your views? Simply register your details below. Once registered, you can comment on the day’s top stories for a chance to be featured. Alternatively, click ‘log in’ or ‘register’ in the top right corner to sign in or sign up.Make sure you adhere to our community guidelines, which can be found here. For a full guide on how to comment click here. More
