CHANCELLOR Rachel Reeves faced fresh calls for a wealth tax after a major think tank said that she will likely have to raise taxes to plug a £51 billion black hole in the public finances.

The National Institute of Economic and Social Research (Niesr) said that Ms Reeves is on track to miss one of her fiscal rules by some £41.2 billion in 2029-30.

She faces an “impossible trilemma” of trying to meet her fiscal rules while fulfilling spending commitments and upholding a manifesto pledge not to raise taxes, it said.

Ms Reeves will have to find £51bn to rebuild the fiscal buffer of just under £10bn wiped out by weaker-than-expected recent economic activity, U-turns on welfare cuts and forecast-beating borrowing, Niesr said.

She will likely need to break her pledge not to raise taxes for working people and resort to “moderate but sustained” hikes, or cut spending, to address the shortfall, according to the group.

Unison assistant general secretary Jon Richards said: “A wealth tax on the richest in society would be a sensible first step.

“New levies on the gambling industry could also be considered, and perhaps an online sales tax. Then global giants like Amazon could help contribute more to the UK economy.”

Former Labour leader Jeremy Corbyn MP said: “Inequality is a political choice, not an economic necessity.

“The Chancellor could have announced a wealth tax a year ago. Her continued failure to do so will prolong the suffering of those in poverty and deepen the crisis in our public services.

“I want to live in a world where we care for each other. That’s why we need a wealth tax to support and empower those in need.”

The report has fuelled speculation over which taxes Ms Reeves will raise.

She told ministers last month that taxes would have to rise after the government scrapped restrictions on welfare payments.

Niesr said that a freeze on council tax thresholds, bringing more households into higher tax bands, would raise about £8bn while a rise in income tax to 25p for the basic rate and 45p for the standard rate would close the gap entirely.

It comes as Prime Minister Sir Keir Starmer faces a potential wave of strikes by public-sector workers calling for higher wage rises.

Backbench Labour MPs are also expected to challenge his leadership if manifesto spending pledges are scrapped in the budget to reduce the deficit.

A spokesman for Momentum said: “Making cuts or taxing low income and average earners undermines Labour’s core principles.

“To heavily invest in our public services and begin to reverse years of austerity, the wealthiest must pay their fair share.”