Chancellor Rachel Reeves has been urged to “reject the path of least resistance” and consider increasing taxes in the budget.
The Institute for Government (IfG), a leading think tank, said Labour’s “rash” and “unrealistic” approach to tax has left the chancellor reaching for “piecemeal changes”.
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The government has repeatedly said it will not increase VAT rates, income tax or national insurance at the budget in November.
But a report by the think tank calls on Ms Reeves to commit to serious tax reform, instead of reaching for an “eclectic grab bag of tax raisers”, which could further complicate the system.
It comes after the Resolution Foundation proposed a 2p cut in national insurance, matched by a 2p rise in income tax, to create a “level playing field” and protect workers’ pay.
Tory shadow work and pensions secretary Helen Whately said Ms Reeves was “preparing even more tax rises, set to hit families already struggling and choke off jobs at the very moment we need them most”.
She added: “Every Labour government ends the same way, with more people out of work, higher taxes and a bigger black hole in the public finances.”
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Ms Whately’s remarks came as the government announced a £25m funding boost for the expansion of youth hubs.
The Premier League has joined forces with Labour to support the expansion, with top football clubs signing up to help get more young people into work.
Work and Pensions Secretary Pat McFadden will be speaking to Sky News Breakfast about the plans this morning.
Scrapping two-child benefit limit would reduce child poverty, report suggests
Meanwhile, a report has suggested scrapping the controversial two-child benefit limit would reduce child poverty, but not necessarily help with a youngster’s early development and their readiness for school.
The Institute for Fiscal Studies (IFS) concluded the policy has “no statistically significant impact” on the proportion of children in England achieving what is known as a “good level of development” by age five.
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The two-child limit, which was announced by the Conservatives in 2015 and came into effect in 2017, limits child tax credit and universal credit to the first two children in most households.
The government is expected to publish a strategy to tackle child poverty this autumn and has been under pressure to scrap the policy, which charities and organisations working in the sector estimate pulls more than 100 children a day into poverty.
