Rachel Reeves readies ‘taxi tax’ in determined bid to fill her coffers | Politics | News | EUROtoday

Rachel Reeves is making ready to slap a 20% VAT cost on taxi and personal rent journeys in a transfer already branded the “taxi tax” by livid campaigners and trade insiders. The Chancellor is anticipated to unveil the measure in her autumn Budget on November 26 as she scrambles to plug what officers describe as a £50bn black gap within the public funds. Treasury sources say the plan may elevate as a lot as £750m a yr.

However, critics have warned the coverage will fall hardest on these residing exterior London, the place cabs are sometimes the one dependable type of transport. Michael Solomon Williams of the Campaign for Better Transport, mentioned: “Make no mistake, this will hammer rural communities. Taxis and private hire vehicles are a lifeline for people who can’t drive or who need accessible door-to-door travel.”

Speaking to the Daily Telegraph, Mr Solomon continued: “The Government should be making public transport cheaper and more accessible – not taxing the very services that fill in the gaps.”

At current, most taxi drivers exterior the capital don’t cost VAT as a result of they’re self-employed and fall beneath the £90,000 annual earnings threshold. Ms Reeves’s new scheme would apply a blanket charge throughout the sector no matter driver standing.

Industry figures worry the transfer will drive up fares by a fifth in a single day, pricing out these on decrease incomes and undermining already fragile rural connectivity.

One taxi operator based mostly in Cumbria warned: “It’s effectively a 20 per cent hike on people just trying to get to work, see a doctor, or make a hospital appointment. We’re not Uber. We don’t have corporate backers. This will destroy small cab firms.”

The Treasury has been weighing the measure since Uber mounted a authorized problem to the present exemption. Though the courts in the end upheld the established order, Reeves and her staff have stored the thought alive as a revenue-raiser.

A grassroots Stop the Taxi Tax marketing campaign has sprung up, arguing the measure breaks Labour’s election guarantees.

A spokesman for the marketing campaign, mentioned: “The Taxi Tax breaches Labour’s manifesto pledge not to raise VAT. It will hit rural communities especially hard – places where there is no bus, no train, no alternative.

“We urge the Chancellor to stick to her promise and avoid another blow to those already isolated.”

Polling commissioned by the marketing campaign exhibits sturdy public resistance.

The marketing campaign spokesman added: “Seven in ten voters oppose the plan. Almost six in ten villagers say they would cut their taxi use if fares rose. Half of respondents in rural areas said a 20 per cent hike would make journeys outright unaffordable.”

Ms Reeves, nevertheless, seems decided to press forward. With borrowing tipped to overshoot official forecasts by £11.4bn between April and August, Treasury insiders have acknowledged she has little selection however to hunt recent income streams.

A HM Treasury spokesperson mentioned: “We take this issue very seriously and recognise its complexity. We are reviewing feedback from our recent consultation and will publish our detailed response shortly.”