‘Reckless’ Reeves batters Britain with largest tax hikes in developed world

Rachel Reeves is raising taxes at the fastest pace in the developed world, according to the International Monetary Fund.

The global watchdog said the UK tax burden is set to rise from 37.6 per cent of national income when she became Chancellor in 2024 to 42.1 per cent in 2031.

That would be the highest peacetime level on record and amount to an extra £130billion a year – or £4,500 per household.

And the 4.5 percentage point increase dwarfs anything seen in any of the other 37 advanced economies analysed by the IMF in its latest ‘Fiscal Monitor’ report.

The findings are an embarrassment for the Chancellor, who is attending the IMF’s spring meetings at their Washington DC headquarters this week, and make a mockery of Labour’s pre-election vow not to increase taxes on ‘working people’.

Shadow Chancellor Sir Mel Stride said: ‘Rachel Reeves said she wouldn’t tax working people but she’s delivering the fastest rise in the tax burden of any major economy.

Tax raid: The IMF said the UK tax burden is set to rise from 37.6% of national income when Rachel Reeves became Chancellor in 2024 to 42.1% in 2031

‘That is reckless and totally unsustainable for our economy. Instead of raising taxes to pay for yet more welfare, Labour should be getting spending under control so we can bring down the tax burden and live within our means.’ 

The report came a day after the IMF warned that Britain will suffer the biggest economic shock in the G7 from the Iran war as soaring energy bills hammer households and business already straining under Labour’s tax hikes.

The Fund predicted the that the UK economy will grow by just 0.8 per cent this year – 0.5 percentage points lower than anticipated in January.

That was the largest downgrade of any G7 nation – raising fresh questions over Labour’s handling of the economy which was already floundering long before war erupted in the Middle East.

In its latest report, the IMF said that while the tax burden is due to rise by 4.5 percentage points in the UK, it will go up by 1.7 percentage points in France, 1.2 in Germany, 0.9 in the United States and 0.6 in Italy.

In the other members of the G7 – Canada and Japan – it is due to fall while the average rise across the 38 advanced economies analysed is just 0.9 percentage points.

Incredibly, by 2031 the UK’s tax burden will be closer to that of France than the United States.

The report came as Labour faces mounting criticism over its priorities amid concerns the Chancellor’s extra tax revenues are being spent on a ballooning benefits bill rather than defence.

Former Nato chief Lord Robertson, who served as defence secretary under Tony Blair, this week accused Labour of leaving our national security ‘in peril’, adding: ‘The cold reality of today’s dangerous world is that we cannot defend Britain with an ever-expanding welfare budget.’ And with the economy reeling from soaring energy prices on top of the spiralling tax burden, Labour is under pressure to kick-start drilling for oil in the North Sea.

Donald Trump this week described Labour’s ‘tragic’ refusal to exploit oil and gas reserves in the North Sea ‘absolutely crazy’ – and urged the UK to ‘drill, baby, drill’.

Business leaders echoed those comments and called on Energy Secretary Ed Miliband to reverse course and back the Rosebank and Jackdaw projects which hold fossil fuel reserves worth more than £80billion.

The government has banned new drilling and extended windfall levies, meaning oil and gas producers pay taxes of 78 per cent on profits.

Rain Newton-Smith, chief executive of the CBI, said the windfall tax was ‘reducing investment in the North Sea’ and called for it to be ‘reformed’.

‘There are proposals on the table that the government are considering,’ she told the BBC. ‘They should be implementing them now and be clear that they are going to encourage investment in existing extraction’.

‘There are also decisions that are sitting on the desks of government on Jackdaw and Rosebank which are two of the existing licences for the North Sea.. Those should be given approval which will help our existing oil and gas extraction.

‘It wouldn’t help the overall costs of energy because these are obviously determined on international markets but it would impact on jobs and investment and tax revenue from the North Sea.’ Reform UK shadow chancellor Robert Jenrick said: ‘Rachel Reeves is now officially the fastest tax-raiser in the world and she’s dragging Britain down with her.

‘Only Reform UK will slash wasteful benefits spending, net zero subsidies and foreign aid for rich countries that is bankrupting Britain. Our fully costed plan will lower energy bills by at least £200 and give households across the country much-needed relief.’