Rachel Reeves has promised to \u201cgrip the cost of living\u201d in the budget as she prepares to scrap the two-child welfare limit and freeze rail fares, while putting forward a multibillion-pound tax-raising package.<\/p>\n
The chancellor is preparing to give her second budget on Wednesday after weeks of uncertainty about the scale of the tax rises she will need to impose to plug a financial hole of about \u00a320bn.<\/p>\n
Writing in the Mirror and the Sunday Times this weekend, the chancellor acknowledged that high prices \u201chit ordinary families most\u201d and the economy \u201cfeels stuck\u201d for too many.<\/p>\n
\u201cThat\u2019s why in my budget on Wednesday, I will take action to grip the cost of living,\u201d she said.<\/p>\n
She will signal that she wants to help those struggling with the cost of living, while also raising taxes in order to put the public finances on a more sustainable footing.<\/p>\n
Some of the tax rises she is likely to opt for include:<\/p>\n
Freezing income tax thresholds for an extra two years to 2030, bringing more people into higher tax bands as wages rise.<\/p>\n
Making salary sacrifice schemes less generous, including those for pension contributions.<\/p>\n
Bringing in higher tax on the most expensive properties, including a surcharge on the highest-value houses.<\/p>\n
A pay-per-mile scheme on electric cars to help fill the tax gap from petrol duty as more people opt for green vehicles.<\/p>\n
Reeves is coming back with more tax rises despite saying she would not have to again after last year\u2019s increase in employer national insurance contributions. However, she has backed away from the option of raising income tax<\/a>, which was under consideration for some weeks.<\/p>\n Keir Starmer, who is at the G20 in South Africa, declined to guarantee that future Labour<\/a> budgets would not contain tax rises. \u201cObviously, I do want the budget to focus on growth, stability, which [are] the two pillars that are really important,\u201d he said.<\/p>\n