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Keir Starmer is “a working person” so could be shielded from tax hikes, the chancellor admits
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Keir Starmer is “a working person” so could be shielded from tax hikes, the chancellor admits

The prime minister is set to be among those people protected by tax increases in next week’s Budget, chancellor he suggested.

Asked if Mr Keir Starmer was defined as a person who works, Rachel Reeves said: “The Prime Minister earns his income from going out to work and working for our country.”

Before the election, Labor pledged not to raise tax on working people and ministers have come under increasing pressure to define the term.

But Sir Keir stirred up anger suggesting people whose income is mainly from stocks and shares they were not “working people.”

People from unpaid carers to landlords objected, saying what they do is vital to others and would object to the tax hike.

Asked on LBC radio if Sir Keir was a worker, Ms Reeves said: “He’s a working person.”

Earlier this month, the Prime Minister was forced to pay back more than £6,000 worth of gifts and hospitality he has received since entering No 10 after a row over ministerial donations.

Mrs Reeves added: “In this Budget, we made a clear commitment in our manifesto not to increase the key taxes that working people pay: National Insurance, Income Tax and VAT, and despite the difficult circumstances and the unfunded commitments of the previous government, I am determined to stand by this manifest commitment in the budget next Wednesday.”

The Prime Minister’s comment has increased expectations of a capital gains tax increase. Inheritance tax and fuel duty are also said to be eligible for increases.

Ms Reeves is looking to plug what she calls a “£22 billion black hole” in public finances.

Downing Street was forced to backtrack after initially suggesting that those with even small incomes from stocks and shares would face higher taxes.

Tom Selby, director of public policy at investment firm AJ Bell, said The Independent: “The government’s pledge not to raise taxes on ‘working people’ was always going to fall apart because the definition is potentially so broad.”

“While the rise in the rate of capital gains tax will undoubtedly hit many working people and reduce the rewards for investment – potentially undermining the government’s wider ambition to boost economic growth – the chancellor will argue that generally wealthier people they are the ones who will bear the burden.”