Not raising taxes on working people? Reeves' hikes on jobs largest in developed world, warns OECD
Labour has inflicted a sharper hike in taxes on jobs in Britain than that experienced by any other major economy, new analysis shows.The rise in the so-called 'tax wedge' last year was the biggest among 38 members of the Organisation for Economic Cooperation and Development (OECD).It was described as 'reckless and totally unsustainable' by the Tories and is likely to further fuel accusations that Rachel Reeves's economic policies are killing jobs.A higher tax wedge 'tends to reduce incentives to work and hire by reducing take‑home pay and increasing employers' labour costs', the OECD said.The rise was driven by Labour's £25billion raid on employer national insurance as well as 'fiscal drag' – when income tax thresholds are frozen, meaning more people paying higher taxes even if their pay only goes up in line with inflation. Rachel Reeves has overseen a sharp rise in unemployment after raising taxes on jobsThe 'tax wedge' measures total taxes paid by both employees and employers, minus cash benefits received by working families, as a percentage of labour costs.The OECD said that for a single worker earning the average wage, the tax wedge on average increased by 0.15 percentage points across the OECD in 2025 but in Britain rose by 2.45 percentage points.Its analysis will add to claims that, while Reeves has stuck to Labour's pledge not to raise income taxes, it has ramped up the cost burden on employers making it more costly for them to create jobs.Tory shadow chancellor Sir Mel Stride said: 'Rachel Reeves said she wouldn't tax working people but she's delivering the fastest rise in the tax burden of any major economy.'That is reckless and totally unsustainable for our economy. Instead of raising taxes to pay for yet more welfare, Labour should be getting spending under control so we can bring down the tax burden and live within our means.'The figures come after Reeves this week insisted her plan is working despite grim figures showing a quarter of a million under-35s have lost work since Labour took power.Official statistics also showed pay was starting to fall in real terms even before the Iran war.And the boss of Primark said Labour's policies were increasing the risk of hiring young people.Critics point the finger at measures including tax hikes, botched business rates reform, steep increases in the minimum wage and a raft of new workers' rights.DIY INVESTING PLATFORMSAJ BellAJ BellEasy investing and ready-made portfoliosHargreaves LansdownHargreaves LansdownFree fund dealing and investment ideasinteractive investorinteractive investorFlat-fee investing from £4.99 per monthFreetradeFreetradeInvesting Isa now free on basic planTrading 212Trading 212Free share dealing and no account feeAffiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.Compare the best investing account for you
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Not raising taxes on working people? Reeves' hikes on jobs largest in developed world, warns OECD
