The Chancellor “will not publicly rule out a wealth tax” because it would also mean ruling out a levy on pensioners, a source said.
Rachel Reeves ‘considering’ HMRC rule change for millions of pensioners
The Labour Party government is “considering” a HMRC tax raid on pensioners as Chancellor Rachel Reeves defies the left’s calls for a wealth tax. The Chancellor “will not publicly rule out a wealth tax” because it would also mean ruling out a levy on pensioners, a source said.
Raising capital gains tax or a tax raid on pensioners could arguably be described as a wealth tax, a source said. The senior source added: “The problem is that if the Treasury start shooting down Kinnock’s proposal, they end up being boxed in.
“It’s not going to happen, but they can’t say that publicly.” In a further blow to the Labour left, ministers have branded the idea a “non-starter” and have warned that wealth taxes “just don’t work”.
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One said: “Just look at what’s happened in other countries that have introduced them. They just don’t raise money, certainly not the kind of money that we’re looking for.”
Another cabinet minister said a wealth tax was “off the table”, adding: “Wealthy people are mobile, they can move their assets to other more favourable jurisdictions.”
The chancellor is being pressed by backbenchers and unions to levy a new tax on the savings, investments and property of the wealthy. Lord Kinnock, the former Labour leader, has suggested there should be a 2 per cent tax on assets worth more than £10 million.
Tax experts and economists have questioned the assumptions. Dan Neidle, a tax lawyer, described wealth taxes as “fantasy politics and lazy sloganeering” and said that they have raised a “pittance” where they have been implemented.
He said: “If you tax saving and investment, you get less of it. Less from people in the UK, less from people who leave the UK and less from foreigners. The consequence is a drop in growth.
“For a government that says it prioritises growth, a wealth tax would be a counterintuitive move. People with a brain know it’s not going to happen. Anything you do which creates a hostile climate for investment has an impact.”
Eight nations have introduced wealth taxes only to subsequently scrap them: Austria, Denmark, Germany, Finland, Iceland, Luxembourg, Sweden and France. Today, just four countries retain wealth taxes: Norway, Spain, Switzerland and Colombia.