Rachel Reeves has been handed an unwanted historical distinction – as official figures showed her Budget was the biggest tax-raiser on record.
Updated statistics from the OBR watchdog reveal that the eye-watering package is set to boost the burden by £41.5billion a year by the end of the decade.
That is even more than Norman Lamont’s notorious 1993 fiscal raid in the wake of Black Wednesday – which is estimated to have brought in an extra £40.8billion.
The scoring gives a formal verdict on whether Ms Reeves set a new mark in comparable data, which the OBR holds back to 1970.
The Chancellor has already been confirmed as pushing the tax burden to a new post-Second World War peak – and almost certainly the highest ever for Brits.
Rachel Reeves has been handed an unwanted historical distinction – as official figures showed her Budget was the biggest tax-raiser on record
The OBR keeps a database of Budget measures based on the value they were ‘scored’ at the time.
The costings are extended into the future using the nominal rate of GDP, giving the best available comparison between Budgets.
However, it can only ever be an estimate, and the OBR has stressed that measures often bring in more or less revenue than originally anticipated.
Ms Reeves’ Budget is expected to raise £41.5billion a year by the end of the current forecast period in 2029-30.
The largest element is the massive hike on employer national insurance, which economists have warned will be passed on to ordinary Brits through lower wages and higher prices.
The valuation puts it above Lamont’s 1993 mega-raid, which was worth around £40.8billion.
That came in the aftermath of the Black Wednesday sterling crisis and extraordinarily, was followed by another big tax-raising Budget later in the year.
The October 30 Budget was also larger than Denis Healey’s Spring 1975 fiscal event, valued at £33.3billion.
That was imposed as the UK desperately tried to stop an inflation spiral. The following year the country had to take a bailout from the IMF.
And it exceeds the £32.1billion tax bomb dropped by Rishi Sunak in Spring 2021 following the Covid meltdown.
Other estimates produced by the IFS think-tank have suggested that Ms Reeves’ Budget was slightly smaller than the 1993 package when measured as a proportion of GDP.
Other estimates produced by the IFS think-tank have suggested that Ms Reeves’ Budget was slightly smaller than the 1993 package when measured as a proportion of GDP
The OBR said the Budget measures will take the tax burden to a record 38.3 per cent of GDP
Longer-term stats compiled by the Bank of England indicate that taxes are likely to have been lower all the way back to 1700
The OBR has said the tax burden is projected to reach 38.3 per cent of GDP in the coming years. That would be above the previous high in 1948.
The National Accounts measure of tax as a proportion of GDP was not produced prior to that.
However, longer-term stats compiled by the Bank of England indicate that taxes are likely to have been lower all the way back to 1700.
There have been concerns that Ms Reeves massive tax and spend package will suppress growth.
Fears were fuelled by official figures today suggesting that GDP was already in reverse before the package was unveiled.
The Chancellor said: ‘At my Budget, I took the difficult choices to fix the foundations and stabilise our public finances.
‘Now we are going to deliver growth through investment and reform to create more jobs and more money in people’s pockets, get the NHS back on its feet, rebuild Britain and secure our borders in a decade of national renewal.’
