Rachel Reeves ‘might goal pensioner and driver taxes’ within the Budget

Rachel Reeves could raise more than £20 billion in next month’s Budget by raising taxes on wealth, pensions, and drivers, according to an influential think tank.

In a new report today, the Resolution Foundation says tax rises in next month’s Budget are a ‘dead cert’ – and suggests the Chancellor could raise ‘tens of billions’, despite ruling out increases in income tax, National Insurance and VAT during the election.

The think tank, which has close links to Labour, also calls for rises in fuel duty – and suggests Labour should consider charging drivers an extra 6p a mile to use their cars as part of a new road pricing scheme.

Sir Keir Starmer has already paved the way for a tax-raising Budget next month, warning it will contain ‘painful’ decisions on both tax and welfare.

Adam Corlett, of the Resolution Foundation, said: ‘There is widespread speculation about what might be in the first Budget of the new Parliament, but overall tax rises are a dead cert and time-honoured tradition. 

Rachel Reeves (pictured in July) could raise more than £20 billion in next month’s Budget by raising taxes on wealth, pensions, and drivers, according to an influential think tank

The think tank, which has close links to Labour, calls for rises in fuel duty – and suggests Labour should consider charging drivers an extra 6p a mile to use their cars as part of a new road pricing scheme (file image)

‘The Labour manifesto included £10 billion of tax rises, but fresh ones will be needed in order for Rachel Reeves to sufficiently fund public services and investment while still hitting her fiscal rules.

‘Long overdue reforms to Inheritance Tax, Capital Gains Tax and pension contribution reliefs would fit the bill and could raise over £20 billion if needed, while also making the tax system fairer and more consistent between different taxpayers.’

Today’s report suggests that ‘reforms’ to capital gains tax, which is levied on the sale of assets, could raise up to £12 billion a year.

Closing ‘loopholes’ in inheritance tax could raise a further £2 billion.

The study also suggests that the Chancellor should levy National Insurance on employers’ contributions to staff pensions, potentially generating another £9 billion a year.

It says these three tax raids would pass the ‘triple test’ of ‘improving tax efficiency, ensuring that tax rises fall on those with the broadest shoulders and not breaking manifesto commitments’.

Closing ‘loopholes’ in inheritance tax could raise a further £2 billion (file image)

The report also calls for an end to the temporary 5p cut in fuel duty, which costs the Treasury £2 billion a year, and says that annual increases in the motoring tax should be restarted for the first time in more than a decade.

In a recommendation that will alarm motorists, it also calls for ministers to start work on a comprehensive system of road pricing in order to recoup losses from the switch to electric vehicles.

It suggests road charges, starting at 6p per mile, could eventually replace the revenue lost from fuel duty as the switch to electric vehicles accelerates.

The report adds: ‘Delay will likely only make the choice more painful, as the number of electric vehicle drivers grows daily – and it is easier to raise taxes for future drivers than current ones. 

‘Given the potential need for significant legislation, physical piloting and standards that need to be set for manufacturers in the case of some possible outcomes, there should now be a sense of urgency.’