By now the realities have long-since sunk in. Despite the result of the General Election being more or less guaranteed a long time before it even took place, Ms Reeves now faces having to actually balance the country’s books.

Of course, this is no easy task because it affects real people and their very real daily struggles. Therefore, now that her Government’s diktats are actually being acted upon rather than just being background bluster; their words now have price tags.

Even during the very best economic times, I can't imagine a more daunting task than having to sit at the Chancellor’s desk trying to rob Peter to pay Paul. It can't ever be easy trying to feed a brood of cash-strapped Ministries, all chirping away with demands of an few extra billion here or a few hundred million there. Let's face it, almost everything in Government (including the Government’s electoral fate) depends on a Chancellor’s aplomb and the hope that he (or she) gets the economic fundamentals right.

It only takes one shabby budget to potentially upset a very delicate balance (think Liz Truss). Spook the markets and there’s trouble ahead. Spook consumer confidence and it’s yet more misery for the Chancellor, not to mention the country at large. Then there are all those unpredictable geopolitical factors which are well and truly out of anyone’s hands.

Basically, there's always something ready to rain on a Chancellor’s parade, despite even the very best plans and intentions. War, oil price spikes, supply chain issues - the list is almost endless.

From National Insurance Contributions to Income Tax, the Exchequer is constantly inventing ways by which it can tweak these levies so governments can keep on dipping into our collective pockets. None of their ideas are exactly new, it's just a case of the Government of the day (whatever the colour of their rosette) taking ever bigger percentages of our cash. It's a never ending fiscal assault. But, there again, society constantly expects more and more from the authorities. The cold, hard truth is that none of it comes without cost.

Furthermore, the authorities aren't always best placed to provide value when it comes to delivering the many services society demands from them. That's because there's often a frightening amount of waste within the public sector, mainly because there are no bottom lines to worry about. The top brass will get paid regardless of performance.

The problem is, they're spending our cash, not their own. And that clearly matters. No ordinary business would ever survive without making a tangible profit whereas the public sector seems to have access to an endless stream of public money. So, they can be completely rubbish and no one gives a hoot?

Perversely, if individual authorities or departments perform too well, the following year's awards from the Central Government might not be quite as generous. Wastage actually pays!

The truth is, no Government has its own revenue. Governments spend OUR cash. Even after last October’s record-breaking tax raid, Rachel Reeves will continue to eye up our accounts. If there's a black hole in public finances, guess who pays? Yep, WE all do.

Look at Birmingham City Council for instance. The authority was bankrupted by £760-million in equal pay settlements, a disastrous new IT roll-out as well as a cocktail of other negative factors. But guess who paid? Yes, through no fault of their own, the people of Birmingham did. They faced an unprecedented 20% hike to their Council Tax bills. Bungling civil servants caused the problems only to present poor old Joe Public with the bill. No other business could possibly get away with that.

And so our esteemed Chancellor is continuously dreaming up 101 new ways to raise more tax revenue. It's part of her job after all. All tax hikes are embellished by a plethora of brand new justifications, indicating why Governments are so hopelessly addicted to our hard earned cash.

Already the current Government portrays the £41.5bn October tax hikes as a one-off emergency measure. Apparently, it was all done to help plug a £22-bn “black hole” which was allegedly left in the country’s finances by the previous Tory administration. So, the tax hikes are already presented as being someone else’s fault. But I guess, that's just politics?

In the aftermath of her maiden speech, Ms Reeves assured business leaders that the Labour Government wasn't going to hit them or the public at large with any more expensive public borrowing and the subsequent tax rises that would inevitably accompany the borrowing in order to service the debt. Since the budget however, ministers have refused to reinforce that promise of fiscal prudence. This has led a number of financial boffins to warn that more tax rises are “highly likely” in the forthcoming Spring Statement on the 26th of March.

But any new tax rises will need to be politically palatable within the current economic environment. VAT and income tax are always political hot potatoes, so I doubt they'll be touched - for now at least.

VAT was introduced in 1973 at a rate of 10%. The levy has gradually doubled to its current rate of 20%. That's one fifth of the value of all goods and services that are subject to VAT.

Raising the VAT rate always entails additional costs for millions of British businesses who have to collect the levy. Nudging the rate ever closer towards 25% would mean that the price of all qualifying goods and services could soon be made up of close to one quarter in pure tax alone. There are only so many levers a Chancellor can pull without risking derailing the economy.

It looks to me that Governments believe that stealth taxes are genuinely invisible. So-called stealth taxes are implemented by a number of different means, such as by freezing (or extending an existing freeze) on certain tax thresholds. This means that tax rates no longer reflect the effects of inflation, so we all end up paying more in real terms.

Much of the low-hanging fruit when it comes to taxable revenues have already been picked. Indexation of alcohol, tobacco, air passenger and vehicle excise duties will help the treasury but won't raise nearly as much as reversing Tory cuts to employees' National Insurance Contributions. Tempting, if we end up in a recession, despite pre-election assurances that working people wouldn’t face any further tax rises.

Frankly, the Government will have to be a lot more honest about how we’re all taxed. There’s no such thing as stealth taxes when the dreaded brown envelope lands on our doormats.

Raising the headline rate on one or more of the bigger taxes, such as income tax or VAT, will reel in the kind of revenue that the Treasury is really after. Underhand tactics only undermine business confidence as well as everyone else’s trust in the political classes. That, I'm afraid, will only thwart any realistic ambitions for enhanced business confidence and resultant economic growth prospects - which just so happens to be the real holy grail in all of this.

Author

Douglas Hughes is a UK-based writer producing general interest articles ranging from travel pieces to classic motoring. 

Douglas Hughes