Breaking the 50-Year Tax Taboo: Could Rachel Reeves Make History in Her Upcoming Budget?

For over 50 years, the basic rate of income tax has remained unchanged, with the last increase occurring under Labour’s Denis Healey in April 1975. As Chancellor Rachel Reeves prepares to present her upcoming budget, the possibility of breaking this long-standing tax taboo has sparked significant intrigue among political commentators and the public alike.

With only three weeks until her budget announcement, Lord Downing Street served as the backdrop for a breakfast conference that aimed to set the stage for potentially unpopular tax decisions. Traditionally, this time frame is dominated by voices other than that of the chancellor, but Reeves has taken an unusual step by commandeering the spotlight, suggesting that major changes might be on the horizon.

The initial remarks from this conference were designed to outline the economic landscape and provide the rationale behind her thinking before detailing specific tax increases. This approach gives insight into Reeves’s considerations—after all, the choices regarding which taxes to raise and by how much will be revealed only during the actual budget announcement.

The backdrop of this discussion is Labour’s election manifesto, which explicitly stipulates, “Labour will not increase taxes on working people…” This assertion adds complexity to the situation, as breaking this promise could lead to significant political fallout, potentially defining moments for both Sir Keir Starmer and Reeves.

Despite the manifesto’s promises, many economists argue that due to the current economic conditions, tax increases might be unavoidable. There’s a growing consensus that taxes will rise, although uncertainty prevails about which specific measures Reeves might implement. As the date nears, attention will remain firmly on whether Reeves can navigate the turbulent waters of public expectation and political strategy as she contemplates whether to engage with this fifty-year legacy.