Rachel Reeves finally admits her tax bomb Budget WILL hit your pocket with Brits left £300 worse off
TAX hikes in the Budget are set to hit workers in the pocket with lower pay increases, the Chancellor has said.
Rachel Reeves conceded her decision to hike national insurance for employers could have a knock-on effect for staff.
The warning came as the independent watchdog said the average person would be £300 a year worse off with another five years of sluggish growth.
The tax raid – that could raise as much as £25 billion – could affect wages for private sector wages unless firms soak up the extra costs.
Ms Reeves told BBC Breakfast: “I said that it will have consequences.
She added: “It will mean that businesses will have to absorb some of this through profits and it is likely to mean that wage increases might be slightly less than they otherwise would have been.”
She also revealed that the measure meant that she had little other choice following her inheritance from the previous administration.
The Chancellor said: “Look, what alternative was there? We had a £22 billion black hole in the public finances.”
Plans have been announced that will protect the smallest businesses from the tax rise.
Despite claims of breaking the Labour party manifesto, Ministers say they have not raised taxes on working people – by hiking national insurance, income tax and VAT.
Laura Trott, Shadow Chief Secretary to the Treasury, said: “Rachel Reeves confirmed this morning that her budget will hit pay for workers.
“This follows from OBR saying household income will fall by 1.25%, and inflation will be pushed up because of the decisions in Labour’s budget.
“This is the Budget Labour planned all along but were not honest about at the election. And its’s no wonder, the effects of it are far worse than even we predicted during the campaign.”