Rachel Reeves has dropped the idea of rising income tax in the upcoming Budget.
This decision comes after days of speculation, during which Reeves warned that she might break Labour's manifesto promise.
She had suggested that increasing income tax could help fix the government's financial problems and warned that sticking to the manifesto pledge would otherwise require "deep cuts" to public spending.
According to The Financial Times, the reason Reeves has decided to drop plan to raise income tax is that she was concerned that doing so would frustrate public and also cause anger among Labour MPs.
Reports suggested that the chancellor might raise revenue by changing or increasing several smaller taxes.
However, the critics have warned that this approach could make the tax system more complex and less efficient.
Speaking to Times Radio, Culture secretary Lisa Nandy said on Friday morning that ministers are working on “making the fairest possible choices."
She described Budgets as “the subject of a lot of work and careful consideration and, in our case as a government, about making the fairest possible choices so that we can help the economy to grow, and we can also ease the pain that people have been put through over the last decade-and-a-half."
However, the exact details of the Budget will be announce on November 26, 2025.
