New ‘Putin tax’ hikes on the table to protect UK from Russia threat ...Middle East

Ministers are eyeing tax rises in the autumn Budget as they seek to set a pathway to increasing defence spending to 3 per cent of GDP in the next parliament.

Sir Keir Starmer has committed the UK to increase spending on defence and security from 2.3 per cent to 2.5 per cent by 2027 in response to the Trump administration’s threats that it will pull support for Ukraine.

The Prime Minister has also pledged to raise defence spending to 3 per cent of the UK’s economic output after 2029/30, as he seeks to strengthen the country’s military might to deter Vladimir Putin in the absence of continued US support.

According to one government insider, the Budget in the autumn would provide an “opportune moment” to look at tax hikes to pay for the pledge.

Chancellor Rachel Reeves resisted raising taxes in this week’s spring statement, but economists have warned that if growth remains lower than official forecasts, she will have little choice but to bring in tax hikes in the Budget.

Last month, Starmer chose to cut spending on overseas aid in order to fund the 0.2 percentage point rise in defence spending. However, according to the Office for Budget Responsibility (OBR), increasing funding to 3 per cent would cost an additional £17.3bn in 2029/30.

It has prompted growing calls from MPs for Reeves to raise taxes or tweak her fiscal rules as she is faced with increasing defence spending while also cutting spending on welfare and other public services, such as local government, environment and prisons.

Backbenchers have argued that Donald Trump’s actions towards Ukraine and his regular threats that he would ignore Article 5 that underpins Nato – the agreement that an attack on one state is considered an attack on all – provide Starmer and Reeves sufficient political cover to increase taxes to fund defence.

The UK needs to bolster its military capabilities to meet the growing threat from Russia.

One government insider said they “accepted the argument” about the need for tax rises, but insisted that it would not have been right to have done so when Starmer announced the 0.2 percentage point uplift to defence last month.

“It was urgent, so we had to make the argument about 2.5 percent fast and to reach it sooner than others had promised, too, to show how serious we were,” the source said. “Promising future tax rises to fund it would not have looked credible and could have been open to attack about how much certain taxes would raise.”

But the insider added that decisions around tax and increasing spending to 3 per cent will come later in the year. “When you start talking about the Budget and how we get to 3 per cent, that seems like a more opportune moment to have those conversations.”

square TAX Explained

All the taxes that could go up after the Spring Statement - and the risks, rated

One Labour MP said any plans to increase taxes would be politically toxic, but suggested the Chancellor could introduce a “Putin tax”, adding: “It would mean that people would know who to blame for the tax rise.”

The Government has ruled out increasing taxes on working people, meaning there will be no increases to income tax, employees’ national insurance contributions or VAT.

But speculation is mounting that Reeves will scrap her plans to unfreeze income tax thresholds by 2028, in a move that will raise an extra £7bn over the two years to 2030 but will drag one million more people into paying higher rates of taxation.

The Chancellor is also widely expected to overhaul cash ISAs in order to encourage savers to put their money in stocks and shares ISAs. Reeves is understood to be open to the idea of cutting the amount of money that can be saved in a cash ISA tax-free, which is currently £20,000. Official figures show that the tax relief cost the Treasury £2.1bn in the year up to April 2024.

Changes to capital gains tax, pensions tax relief and inheritance tax are also seen as potential areas that the Treasury could look at in order to raise income, while avoiding placing a direct tax on people’s payslips.

Labour MPs on the left of the party have long been calling for a “wealth tax” to be introduced, targeting individuals worth more than £10m but the Institute for Fiscal Studies has said no country has successfully introduced such a levy.

Speaking in Paris on Thursday, Starmer suggested that the Government’s record to date showed it had a “mindset” that was opposed to increasing taxes.

Hence then, the article about new putin tax hikes on the table to protect uk from russia threat was published today ( Friday 28/03/2025 - 06:10 PM ) and is available on inews ( Middle East ) The editorial team at PressBee has edited and verified it, and it may have been modified, fully republished, or quoted. You can read and follow the updates of this news or article from its original source.

Read More Details
Finally We wish PressBee provided you with enough information of ( New ‘Putin tax’ hikes on the table to protect UK from Russia threat )

Also on site :

• Iraq coach says World Cup can help ‘change perception’ of country
• STAG INDUSTRIAL TO REPORT FIRST QUARTER 2026 RESULTS
• Dodgers Claim Grant Holman From D-Backs