Drivers have been warned that Rachel Reeves could be increasing two “stealth taxes” in her autumn Budget. Conservative shadow transport secretary, Richard Holden, told the Express that he fears the Chancellor is planning to hike insurance premium tax (IPT) – currently a 12% or 20% rate applied to most insurance premiums – “which will hit every driver in the country”. Fuel duty, he added, is “under pressure”, having been frozen in Ms Reeves’ last Budget, and since the 2011/12 tax year. Mr Holden said: “They’re looking at […] those transport stealth taxes. It is a real concern for people, and that goes from duties to IPT, all the way through.
“I think people are really worried about it. I think people are worried about it for obvious reasons, because she is struggling around trying to solve a problem of her own making. And I really worry, whether it’s above inflation fair rises on the railways, or whether it’s fuel duty increases, it’s going to be either the taxpayer or the consumer that pays for her political choices.”
Another possibility, the former Tory chairman also suggested, was an increase in airline passenger duty, paid by flight operators.
Paying union “paymasters” for wage increases meant the nationwide £2 bus fare cap had to be scrapped, he also said, as well as the A303 tunnel scheme in Wiltshire.
Ms Reeves acknowledged on September 10 that higher taxes could hit economic growth as she sought to reassure businesses about her Budget plans.
Cabinet ministers have been ordered by the Chancellor to keep a tight rein on spending in order to reduce the pressure on the public finances, limiting the need for taxes to balance the books.
The Chancellor said: “I do recognise that tax policy does impact economic growth. One of the reasons why I spoke about the need for spending restraint at Cabinet yesterday is that I recognise [that] to make sure that the numbers add up it’s not just what you bring in, it’s also what you’re spending.
“But crucial for all of this is economic growth. If you can grow the economy, you can make these decisions around tax and spend so much easier.
“One of the reasons why taxes have risen to such a high level is because we’ve had such poor growth and such low levels of investment and such a deterioration in our productivity performance, both compared to the past, but also compared with other countries.
“I’m determined to drive those things up, and that is why growth continues to be the number one mission of this government, and tax policy also needs to reflect that mission.”
