An income tax raid was unthinkable. Now it looks inevitable

Economic Management Challenges - The Chancellor, Rachel Reeves, is under pressure to reconsider her promise not to increase income tax due to a struggling economy and disappointing tax receipts [1][6] - The government previously attempted to limit growth in the benefits bill but faced significant pushback, indicating a challenging political environment for fiscal restraint [3][4] Fiscal Policy Constraints - Reeves has redefined fiscal rules to allow for more borrowing but has quickly exhausted that capacity, complicating her financial strategy [4] - The Chancellor's commitments to keep costs down and promote economic growth further limit her options for tax increases [5][6] Tax Revenue Insights - The financial gap is estimated between £20 billion and £50 billion, making it difficult for the Chancellor to raise sufficient funds through smaller tax increases [6] - Major tax sources for the Treasury include income tax (approximately £300 billion), National Insurance (over £200 billion), VAT (over £180 billion), and corporation tax (projected to exceed £100 billion next year), while smaller taxes yield significantly less [7]