Businesses will suffer… but did Labour have a choice?

Readers debate the rise in taxes after Rachel Reeves’ budget. But with UK services as they are… was it not inevitable? (Photo by Leon Neal/Getty Images)

Have your say on these MetroTalk topics and more in the comments.

Businesses will put up prices

A reader says he’ll be forced to pass on the costs to the customer (Credits: Getty Images)

As the owner of a small, family-run farm shop and café in West Sussex, our wage bill is about 40 per cent of turnover.

Any profit is ploughed back into the business. The minimum wage increase for younger workers is actually 16 per cent.

We love our staff and will not reduce headcount but we have no choice but to increase our prices by six per cent come April (20 per cent of this increase will go to the taxman in VAT).

The national insurance increase adds to the pressure. Although I agree to paying more to our brilliant team, the minimum wage increase will fuel price rises, inflation and higher costs for everyone. Christian, West Sussex

Money has to come from somewhere

Why are people irrationally scared of paying tax? Is it greed? (Credits: Getty Images)

Jimmy (MetroTalk, Fri) says the state is ‘bloated’ and that bad public services are evidence of the government being bad at spending money.

If he ran into a blizzard wearing only shorts and got cold, would Jimmy take that as evidence that clothes are bad at keeping him warm? After 14 years of senseless austerity, it’s clear our bad public services are the result of the state not spending enough to maintain them.

The state is actually better at spending because it is answerable to the people, rather than self-interested shareholders. It is also more financially efficient because it doesn’t have to cream off profits. Jimmy also says the state will ‘feast at the expense of entrepreneurship’. He forgets that entrepreneurship is entirely reliant on good healthcare and education to stimulate creativity and provide skilled and healthy employees.

The money has to come from somewhere and after decades of borrowing, we need to raise taxes.

Tax is inherently bad only if you’re someone who cares more about their wealth than their children.

We need to get over this collective irrational fear of taxes so we can have
a sensible conversation about how we should tax people and where the money should be spent. Sharon, Manchester

Other countries make higher taxes work

Norway spends more per person on healthcare than any other country in the world. (Credits: Getty Images)

Otto Inglis (MetroTalk, Fri) thinks higher taxes will be bad for the economy and make entrepreneurs move away. According to him, ‘this disastrous budget is the result of people who lack real-world business experience putting their prejudices before basic economics’.

Let’s take a look at the ‘real world’. Nordic countries have high tax rates. Are they failing? No.

They’re among the most developed countries on the planet, with 
ultra-high GDP per capita and the world’s happiest citizens.

The US raised taxes in the aftermath of Covid. Is it failing? No. Its economy has recovered better than any other in the G7. Neither of these instances resulted in a mass exodus of entrepreneurs because most rich people don’t mind paying a bit extra to look after the country they live in.

How about ‘basic economics’? Well, Thomas Piketty’s book, Capital In 
The Twenty-First Century, was among the most well-researched economic treatises of the modern era.

Piketty concluded that the best way forward was for countries to raise taxes on wealth and capital gains, which is one of the key things Labour’s budget is trying to do.

If I didn’t know any better, I’d say it was Mr Inglis who lacked real-world experience and basic economics.

Still, if he doesn’t like the new taxes, he can always move to a tax haven. Maybe Ireland, where basic services are falling apart, or the Netherlands, where the government has been taken over by the radical right. Charlie Parrett, Stoke

Services are is collapsing – let Labour try to fix it

It is so frustrating reading the rants about Labour being anti-business and anti-anyone with wealth.

Labour has had the guts to try to address the deficit in an unpalatable but necessary way – raising taxes. The NHS is collapsing. Similarly, our schooling and university systems. Social services and mental health services all need massive financial boosts. You want these systems to work? They have to be paid for.

Congratulations to Rachel Reeves and Labour for showing courage. Kate, London

The money earmarked for the NHS will undoubtedly enter the bottomless pit that is NHS funding and make little or no impact on waiting times, more people getting treatment or getting a doctor’s appointment.

A much better announcement would have been to immediately source or create a task force charged with coming up with radical reform of the whole of the NHS. Verna, London

Or can’t they?

So Rachel Reeves is looking after pensions and pensioners? Only if you work in the public sector.

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This economic ‘black hole’ that keeps getting bigger and is solely down to the Tories must have the county on its knees – it’s that big. What Reeves isn’t keen to broadcast is that a large portion of the perceived black hole is down to her. She needs to raise taxes to cover the cost of pay rises and to top up the pension pots of the public sector.

The Labour Party doesn’t have a 
clue on how to run the country. Gary, Essex

You know what else is an attack on aspiration?

In 2012, the Conservative-Liberal Democrat Coalition government tripled the cap on tuition fees for universities to £9,000 (Credits: Getty Images)

The next time a politician tries to claim Labour’s application of VAT on private school fees is an ‘attack on aspiration’, they ought to be reminded that it was the privately educated George Osborne and Nick Clegg who punished ambitious young people when they made English university tuition fees the highest in the world, saddling an entire generation with almost unrepayable debt.

It should also be remembered that it was the party most closely associated with private education – the Tory Party – that created VAT to shift the tax burden to the less well-off and then increased it three times. Philip Duval, Stretford

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