Labour’s plan to reportedly cut taxes has been blasted as a “fantasy” as the opposition refuses to back down on massive spending commitments.
The shadow chancellor is reportedly considering plans to offer income tax or national insurance cuts in Labour’s general election manifesto. Rachel Reeves is considering the option in order to show that the party is one the side of “opportunity and aspiration”, the Times reported.
But Economic Secretary to the Treasury, Bim Afolami MP blasted the move as “fantasy economics” after the opposition recommitted to their £28billion spending on green investment. He accused Sir Keir Starmer of “not being honest” about the fiscal reality facing the UK in 2024.
Mr Afolami said: “We are hearing just more fantasy economics from Sir Keir Starmer. In the same interview, Labour are saying they would cut taxes and recommitted to a £28billion spending splurge without saying how they would pay for either of them.
“They are not being honest with the British people when they say they can increase borrowing, cut taxes and get debt failing – all roads lead to higher taxes to make their sums add up.”
The shadow chancellor is reportedly being pressured by frontbenchers to make a “retail” offer on tax for Brits struggling under the weight of the cost of living crisis.
She has said she believes the tax burden is too high and makes “no apology for wanting working people to have more money”.
Darren Jones, the shadow chief secretary to the treasury, has backed this up, telling Times Radio: “What we’ve not been coy about is the tax burden is higher than it has been for a very long time. We want taxes to come down on working people. That’s why we supported the cuts.”
However, the Labour Party remains against the idea of cutting inheritance tax, with Ms Reeves describing this as “not the right priority”.
It also remains unclear which specific taxes they would look to cut. Nick Thomas-Symonds, Shadow Minister without Portfolio, has said “we have to see the fiscal picture” before any such commitments can be made.
Ms Reeves believes that tax cuts offered by Labour must be “bombproof” and should not threaten the party’s fiscal credibility. She views this as integral to winning the next election.
Rishi Sunak is also believed to be considering cuts to inheritance tax or income tax in the upcoming spring budget.
Paul Johnson, the head of the Institute for Fiscal Studies, said that neither Labour or the Tories are being open about their spending plans, saying the former’s numbers “won’t add up” without further information.
“Neither side is being completely open here,” he said. “Hunt makes his numbers add up by pencilling in big spending cuts without saying what they’ll be. Labour know that spending pressures will be very strong and not just for £20billion of green investment.
“Their numbers won’t add up any better without either those same cuts or higher taxes.”
It comes after the Labour Party launched a “Tory tax calculator” to help voters determine if they are “worse-off” under the current Government.
