
Rachel Reeves looking at ‘lots of little tax rises' in Budget as she is under pressure to lift 2 child benefit cap
Senior Labour MP Meg Hillier said that lifting the cap is the most efficient way to lift kids out of child poverty
TAXING TIMES Rachel Reeves looking at 'lots of little tax rises' in Budget as she is under pressure to lift 2 child benefit cap
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RACHEL Reeves is looking at 'lots of little tax rises' in the Budget as she is under massive pressure to find billions to lift the 2 child benefit cap.
Treasury officials have been drawing up a suite of possible levies which the Chancellor could whack on Brits in her fiscal blueprint later this year.
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Senior Labour MP Meg Hillier became the latest to back lifting the cap
One Whitehall official said options included creating another council tax ban - known as a mansion tax.
Although Treasury ministers have previously played down the prospect of this policy.
A Treasury source said: 'They are looking at lots of little tax rises.'
Ms Reeves is under huge pressure from Labour figures - including Gordon Brown - to lift the 2 child benefit cap, which limits the full benefits parents can get to two children.
Sir Keir Starmer is looking at lifting the cap after a revolt from his MPs - but it would cost around £3 billion a year.
With Treasury coffers running low, No11 is expected to have to raise taxes to pay for the benefit.
Senior Labour MP Meg Hillier, chairwoman of the powerful Treasury select committee, became the latest to come out backing lifting the cap.
She told the BBC that it's the most efficient way to lift kids out of child poverty.
She said: 'The only way we will lift children out of poverty in those households is to get that money to them.
'No Labour MP wants child poverty to go up by the end of the parliament.'
Millions hit by benefit cuts as Rachel Reeves warns 'if you can work, you should work!' in bid to fix 'broken system'
Dame Meg has researched the topic and believes that scrapping the two-child limit in April 2025 would immediately pull 350,000 children out of poverty and stop another 150,000 being drawn into poverty over this parliament.
A Treasury spokesman said: 'The best way to strengthen public finances is by growing the economy – which is our focus.
'Changes to tax and spend policy are not the only ways of doing this, as seen with our planning reforms which are expected to grow the economy by £6.8bn and cut borrowing by £3.4bn.
'We are committed to keeping taxes for working people as low as possible which is why at last Autumn's Budget we protected working people's payslips and kept our promise to not raise the basic, higher or additional rates of Income Tax, employee National Insurance or VAT.'
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As tax increases demand new legislation through a finance bill, we won't hear about any changes until the Budget in the autumn – but there is already speculation that any additional spending will necessitate a higher tax burden unless a spur in economic growth helps to boost the Treasury's coffers. Tom Selby, director of public policy at AJ Bell, said: 'Of course, a lot can happen between now and the Budget and we have a number of economic data points that could influence the Chancellor's decisions come the autumn, but speculation about what may be on the table is naturally already rife. 'Perhaps the most drastic decision the Government could make would be to walk back on its manifesto commitment not to tax 'working people' and consider increasing income tax, national insurance or VAT.' Mr Selby added that ideas for a wealth tax may also be considered, along with speculation of further pensions reform. 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Angela Rayner, the Deputy Prime Minister, made a series of suggestions in a leaked memo – including reinstating the pensions lifetime allowance and removing more inheritance tax reliefs, which were calculated to raise approximately £3bn in total. Chris Etherington, tax partner at RSM UK, added: 'It may already feel pretty claustrophobic at the Treasury, with limited headroom below the fiscal ceiling. The hope will be that economic growth will ease this pressure, and the next few months could be crucial to the Chancellor's plans. 'As it stands, the foundations may need further stabilisation and another sizeable rise in tax receipts to fund that.'


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