Are the political winds shifting on tax and spending? Labour entered office vowing to fix a budget black hole, justifying a wave of tax increases as unavoidable. But most of its MPs did not go into politics to reduce the deficit — they want to expand the state’s reach. The more Labour indulges that instinct, however, the clearer it becomes to voters that higher taxes are a choice, not a necessity.

According to Westminster’s consensus, more tax rises are near-inevitable this autumn. Voters, it’s claimed, want both fiscal stability and better funded public services — a combination logically requiring more revenue.

But when the government is abandoning welfare reform while splashing out more on NHS pay, defence and infrastructure, the public can see the truth. Tax rises are not the inescapable price of prudence. They’re a political preference.

No British government, pre-pandemic, has ever sustainably raised more than 34 per cent of GDP through taxes. Labour is already aiming for 37.5 per cent of GDP, the heaviest burden in Britain’s postwar history.

A new government could try to justify that — even breaking manifesto promises like raising employer national insurance contributions (NICs) to get there — if sold as tough budget medicine. But recent decisions show that deficit reduction is not Labour’s lodestar. Higher taxes would go towards entrenching a larger state.

And the public knows it. A recent City AM/​Freshwater poll asked them how the government should plug the £5 billion hole left by the disability welfare U‑turn. Just 17 per cent said Labour should raise taxes. A 59 per cent majority preferred offsetting spending cuts — including 55 per cent of Labour voters. As the government reverses its winter fuel and welfare cuts, while funding Chagos Islands reparations, taxpayers are tuning out claims that tax rises are unavoidable.

This was not one freak survey either. Before the 2025 Spending Review, YouGov found that only 30 per cent of voters supported higher taxes to fund higher spending. Labour MPs may long for a more generous Scandinavian-style welfare state. But voters are increasingly saying something else: government is big enough already — perhaps too big.

In fact, I suspect Labour is more exposed politically on tax and spending than contemporary polling suggests. A new study by the economist Kaetana Numa, published in the academic journal Public Choice, examines fiscal illusion — the theory that voters underestimate how much tax they already pay and what public services cost.

Numa’s experiment gave a large sample of UK employees a personalised breakdown of their full tax liabilities — including levies like VAT, fuel duty and employer NICs — plus information on how those revenue contributions were spent.

The results were eye-opening. Seeing their personalised summaries made people 12 percentage points more likely to back tax cuts and 5 points less likely to support tax rises. But it also shattered spending illusions: support for spending cuts rose by 22 points; enthusiasm for higher spending fell by 20. Even support for boosting NHS funding dropped by 21 points. Better-informed taxpayers clearly wanted lower taxes and lower spending.

So far, the chancellor has exploited fiscal illusion by raising stealth taxes. She’s frozen income tax thresholds to quietly ensnare more earnings through fiscal drag, and increased employers’ national insurance, which politicians pretend falls on firms, despite workers bearing most of the burden through lower pay.

The risk with this underhand approach is that eventually the public notices. As take-home pay is squeezed and Labour splash cash on questionable priorities, the government thus looks susceptible to a tax revolt. If I were Nigel Farage or Kemi Badenoch, I’d be building a slick, shareable calculator showing what people pay, where it goes, and how much recent policy decisions have cost them.

The rich are already voting with their feet against Labour’s tax policies. There’s growing evidence that other ordinary voters may soon use their voice to say that they’re being taxed enough already.