Will taxes go up after the election? Why Labour is on the defensive over its plans

Labour faces continued questions over its tax policies as the Conservatives pile on the pressure in a bid to turn the polls around.

Sir Keir Starmer and Rachel Reeves have set out £7bn of proposed tax increases through changes such as levying VAT on private school fees and cracking down on non-dom status for rich foreigners.

That extra revenue would be spent on small boosts to public spending, mostly in the NHS and education – with no additional funding for most other services which face a real-terms budget squeeze in coming years.

The Tories have been pushing Labour to rule out other forms of tax increase, like they have done VAT, national insurance and income tax, in a series of political attacks – most recently, claiming that the Opposition may impose capital gains tax on the sale of family homes for the first time.

Treasury minister Bim Afolami said on Saturday: “Labour are in chaos over capital gains tax with three U-turns in less than two days.

This morning, Liz Kendall contradicted her party leader.

“The British people deserve to know: what’s Labour real position and will they commit to ruling out the 18 tax rises that we have ruled out in our manifesto?”

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In response, Sir Keir moved to shut down the row, saying: “It was never a policy. It doesn’t need ruling out, but let’s rule it out, in case anyone pretends that it was.”

Conservative strategists are looking to exploit the subtle, but potentially crucial, difference between those taxes that Labour has definitively “ruled out” and those that it simply has “no plans” to enact in power.

Sir Keir and his shadow Chancellor remain dismissive of the idea that they could end up hiking the tax burden, which is already on course to reach a record high in the next parliament.

The Labour leader said: “I reject the idea that the only levers a prime minister has to pull are either the tax lever or the spend lever – there’s growth.”

But party insiders acknowledge that economic growth could take years to provide a serious boost to the public finances, forcing an incoming government to press ahead with the planned squeeze on most Whitehall departments.

Helen Miller of the Institute for Fiscal Studies said this week: “While choosing not to increase tax overall is a legitimate political choice, pledges not to increase a wide range of specific taxes are problematic: they restrict a government’s ability to respond to changing circumstances and can seriously hamper tax reform.”

Labour is under fire from some of its own supporters over a supposed lack of ambition when it comes to repairing the public services which Sir Keir himself says have suffered under the Tory government.

At the same time, Rishi Sunak has told friends he sees uncertainty over Labour’s tax plans as a key way of convincing voters that a change of government would pose a risk to their own financial situation.

The Prime Minister has previously accused Labour of handing households an additional £2,000 pounds in additional tax, although Nick Davies, programme director at the Institute for Government, told i that the interpretation of his work was “misleading” and “not independent or fair”.

While many have cast doubt on Mr Sunak’s contentious figure, the Resolution Foundation think-tank has warned the UK’s next government will need to fill a shortfall of up to £33bn in public finances.

Although Labour’s tax conundrum may not cost it the election it could cast a shadow for years to come.

Election 2024

Rishi Sunak, Sir Keir Starmer and other party leaders are on the campaign trail, and i‘s election live blog is the go-to place for everything on the general election.

On Monday, the Lib Dems launched their manifesto, followed by the Tory manifesto launch on Tuesday, which included a further cut to national insurance. On Wednesday, the Green Party launched its manifesto, which it hopes will secure them some important seats.

Labour’s manifesto launch on Thursday was interrupted by a protester urging for more policies for youth, but Starmer was undeterred as he announced changes to voting age and confirmed his party’s position on tax and spending cuts.

i has urged the parties to commit to its Save Britain’s Rivers manifesto to improve our waterways. The Lib Dems became the first to back the campaign, followed by the Green Party.