"In April 1975, the Labour chancellor Denis Healey sought to grip the UK's runaway inflation and rising unemployment rates an economic crisis triggered by the shock rise in global oil prices by raising the basic rate of income tax. Now Rachel Reeves, faced with her own set of difficult economic circumstances, including a multi-billion-pound budget shortfall, is contemplating the same remedy breaking a 50-year taboo by becoming the first chancellor since Healey to hike the basic rate of income tax."
"It would be a nuclear option at any time, let alone in circumstances where Labour won power a year ago on a cast-iron promise not to raise income tax, national insurance or VAT. In an unusual speech delivered on Tuesday just as the financial markets opened, three weeks before the budget will be announced, the chancellor began to roll the pitch for doing just that."
In April 1975 Denis Healey raised the basic rate of income tax to confront runaway inflation and rising unemployment after the oil-price shock. Rachel Reeves is contemplating an equivalent rise now to address a multi-billion-pound budget shortfall, which would break a 50-year taboo and violate a manifesto pledge not to raise income tax, national insurance or VAT. The chancellor delivered a speech ahead of the budget laying groundwork for the proposal. Proponents argue a single large tax rise would be less politically damaging than multiple small measures. Polling shows two thirds oppose a basic-rate increase, but research indicates some voters may forgive a broken promise if it yields tangible improvements to the cost of living and public services. Final decisions remain outstanding.
Read at www.theguardian.com
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