UK’s Reeves Urged to Use Budget for Deep Tax Reform, Not Just Rate Hikes

British finance minister Rachel Reeves is being pressed by the influential Institute for Fiscal Studies (IFS) to overhaul the UK’s tax system in her November budget, rather than simply raise existing tax rates. With an estimated £30 billion needed to balance public finances, the IFS argued that incremental increases to income tax, VAT, or social security contributions would harm economic growth. Instead, the think tank recommends targeted reforms: revising capital gains tax, shifting local property tax burdens toward high house-price regions like London, and eliminating stamp duty altogether.

Reeves and Prime Minister Keir Starmer have committed to not increasing taxes on “working people,” ruling out hikes in income tax, VAT, or social security rates. The IFS says that commitment narrows options, but doesn’t excuse stalling deeper structural change. “The chancellor should use this budget to take real steps down the road toward a more rational tax system,” said IFS economist Isaac Delestre.

Some in the government and economic circles are now questioning whether Reeves may need to break earlier promises. The National Institute of Economic and Social Research (NIESR) has already suggested she should consider raising income tax if alternative revenue paths prove too damaging. The tension underscores how Reeves must balance political pledges, fiscal sustainability, and economic growth in a deeply constrained environment.