Chancellor Rachel Reeves is being told "don't raise taxes" in her upcoming Autumn Budget as it could kill her plans to bolster gross domestic product (GDP) for the UK economy.
A prominent think tank has argued that Chancellor Rachel Reeves has no choice but to implement tax increases to comply with her fiscal rules, according to a BBC report from last night.
However, this assessment faces strong opposition from tax professionals who maintain that alternative solutions exist.
Tax expert Arjun Kumar, who previously worked at PwC and now heads Taxd, firmly rejected the notion that raising taxes represents the Government's sole option for addressing the £41billion fiscal shortfall.
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Rachel Reeves is being told 'don't raise taxes'
|GETTY / PA
"The idea that Labour's only option to fill the £41billion black hole is to hike taxes is simply not true," Kumar stated.
Kumar pointed to the government's substantial spending budget as evidence that fiscal adjustments could be achieved without increasing the tax burden.
"As it stands, Total Managed Expenditure is £1,285 billion so a spending review could easily fill the fiscal gap, without raising taxes," he explained.
The former PwC accountant advocated for intelligent reductions in Government expenditure rather than imposing additional levies on taxpayers.
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Reeves has attempted to bolster the UK economy
| GETTYHe argued that the Treasury should examine its current spending commitments and identify areas where efficiencies could be found.
This perspective challenges the think tank's conclusion that tax rises are inevitable, suggesting instead that careful budget management could address the £41billion deficit.
Kumar warned that increasing taxes would harm economic expansion and discourage business activity. "Punishing hardworking people with higher taxes won't fix the economy; it will kill the growth we desperately need," he said.
He proposed an alternative strategy centred on fostering business development and attracting investment.
"Instead of a one-dimensional approach, Rachel Reeves should be looking at smart, targeted spending cuts and creating an environment where businesses can thrive," Kumar suggested.
The tax expert expressed concern that higher levies would drive away entrepreneurs and capital. "Higher taxes will just send entrepreneurs and investment abroad, grinding our economy to a halt," he cautioned.
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Households could be hit with a tax raid in the upcoming Budget | PAKumar's growth-oriented philosophy emphasises expanding the economy rather than extracting more from existing taxpayers.
"The real solution isn't to squeeze more out of a shrinking pie, but to grow the pie itself," he argued, suggesting that making Britain more appealing for business growth whilst prioritising essential services like healthcare could boost overall tax receipts without penalising workers and wealth creators.
Meanwhile, the Treasury is already benefiting from increased revenues through existing policies.
Ingrid McCleave, a tax specialist and partner at DMH Stallard, noted "The combination of higher interest rates on savings and the freeze on tax free allowances on savings and income, has created a windfall in taxes for HMRC."