Labour opens door to wealth tax

Telegraph

15 hours ago

Downing Street has opened the door to introducing a new wealth tax following pressure from Labour's union paymasters.
No 10 repeatedly refused to rule out a new levy on wealthy taxpayers after Lord Kinnock, the former Labour leader, said the party was 'willing to explore' it.
In a briefing with journalists on Monday, the Prime Minister's spokesman initially appeared to suggest a wealth tax was off the table, pointing back to past comments from the Chancellor ruling it out.
However, he failed to explicitly repeat that commitment, instead saying repeatedly that Sir Keir Starmer stood by his position that 'those with the broadest shoulders carry the greatest burden'.
It will raise suspicions that Rachel Reeves is considering a new raid on the rich to plug the hole in Britain's finances left by the Government's dramatic reversal on welfare cuts.
The Prime Minister is facing mounting pressure to consider the move. On Sunday, some of Labour's biggest union paymasters, including Angela Rayner's former employer Unison, backed calls for a wealth tax. One union source told The Telegraph they would raise the idea with the Prime Minister and lobby Labour MPs.
Asked on Monday if Sir Keir would back a wealth tax, his spokesman said: 'We have repeatedly said that those with the broadest shoulders carry the greatest burden, and the choices we've made reflect that… But as you know, I'm not going to write the next Budget for you right now.'
He went on to point out that 'the Chancellor has said in the past that we're not going to be bringing in a wealth tax', but repeatedly failed to repeat that commitment.
Asked if those words reflected the Government's current position, the spokesman said: 'The existing position is what I've just said a couple of times, which is that we have repeatedly said, as the Prime Minister has said, that those with the broadest shoulders carry the greatest burden, and the choices we've made reflect that.'
He added: 'The Government is committed to making sure the wealthiest in society pay their fair share of tax. And that's why the Chancellor announced a series of reforms in the last Budget to help fix the public finances in as fair a way as possible.'
In an interview with The Telegraph earlier this year, Ms Reeves said there would be no increases to wealth taxes in her Autumn Budget.
'We're not interested in a wealth tax,' she said. 'Our priority is to grow the economy and that's the way that you make working people better off and secure better public finances.
'But there was lots of speculation ahead of the Spring Statement, including in your paper, about all the taxes I was going to raise. What taxes did I raise in the Spring Statement? None.'
Asked on Monday if the position had now changed, the spokesman said: 'The position is as it's always been, and as I say, the Government is committed to making sure the wealthiest in our society pay their fair share of tax, but I'm just not going to write future Budgets here, as is our long-standing position.'
Economists have warned that a new wealth tax would trigger a fresh exodus of the rich from Britain. However, the Prime Minister's spokesman insisted that finance leaders still see the UK as the 'best place in the world to invest in'.
It comes after Cabinet ministers were warned taxes would have to rise following Sir Keir's capitulation on benefits.
The gutting of the welfare cuts package last week has required the Treasury to find an extra £4.6 billion a year but has emboldened hard-Left Labour backbenchers to push for more policy changes.
Speaking on Sky News on Sunday, Lord Kinnock, who led the Labour Party between 1983 and 1992, said of Sir Keir's Government: 'The appearance has been given that they are bogged down by their own imposed limitations.
'There are ways around that, ways out of it, pathways that I think people are willing to explore and actually would commend themselves to the great majority of the general public.
'They include, for instance, asset taxes in a period in which for the last 20-odd years in the United Kingdom, like quite a lot of other Western economies, earned incomes have stagnated in real terms while asset values have zoomed. They've just gone through the roof and they've been barely touched.
'Now, you wouldn't have to touch assets of under £6 million or £7 million, so people's houses would be secure. But even by going for an imposition of 2 per cent on asset values above £10 million, say, which is a very big fortune, the Government would be in a position to collect £10 billion or £11 billion a year.'
Five trade unions have told The Telegraph that they will pressure the Prime Minister to pursue wealth taxes, while Labour rebels threw their weight behind the demands.