A senior cabinet minister has declined to rule out the introduction of a wealth tax in Rachel Reeves’s autumn budget as Labour comes under growing pressure to raise revenues without resorting to spending cuts or breaking key manifesto pledges.
Transport secretary Heidi Alexander (main picture) said proposals such as those backed by former Labour leader Lord Kinnock were not discussed “directly” during a cabinet awayday at Chequers.
Asked whether a wealth tax was on the table, she said: “Not directly.”
Labour is facing calls from unions and some MPs to tax “unearned income” such as returns from savings, property or investments.
MORE TAXES
Kinnock has proposed a levy on assets over £10 million, potentially raising £11 billion – though Treasury officials say it would be simpler to modify existing taxes.
Alexander reiterated Labour’s pledge not to increase taxes on “modest incomes, working people,” but declined to confirm whether tax rises were planned.
“The chancellor will set her budget. I’m not going to sit in a TV studio today and speculate… When it comes to taxation, fairness is going to be our guiding principle.”
FISCAL GAP
Reeves has already committed not to raise income tax, VAT or national insurance, a position that some Labour MPs say leaves “unnecessarily small space for manoeuvre.”
The chancellor faces pressure to plug a growing fiscal gap. Higher borrowing costs and recent U-turns – including £1.25 billion on winter fuel payments and £5 billion on welfare reforms – have eroded her £9.9 billion headroom.
Meanwhile, the Institute of Economic Affairs warned that Labour’s Employment Rights Bill could cost workers £5 billion through “stealth taxes,” as mandates on employers may lead to lower pay growth and reduced hiring.
