Rachel Reeves has gone further than before in explicitly ruling out Labour imposing a wealth tax if it wins the next election, as the party doubles down on its efforts to demonstrate economic competence.
The shadow chancellor confirmed that a Labour government would not bring in a mansion tax on expensive properties, increase capital gains tax or put up the top rate of income tax.
“We have no plans for a wealth tax,” she said. “We don’t have any plans to increase taxes outside of what we’ve said. I don’t see the way to prosperity as being through taxation. I want to grow the economy.”
Reeves also confirmed that Keir Starmer’s leadership pledge to increase the 45p top rate of income tax was – as was widely thought to be the case – now off the table, after he indicated in June that he was no longer keen on the idea.
Her remarks underline how Labour has decided that it needs to go further in blunting Conservative attacks, with party figures fearful that any hints of tax rises or unfunded spending commitments would be used to suggest it would be profligate with the nation’s finances.
There are also plans to go on the attack over Rishi Sunak’s stewardship of the economy, as internal polling suggests Tory-to-Labour switchers are irritated by his optimism on inflation when they do not feel that their own finances are improving.
Reeves’ words, in an interview with the Sunday Telegraph, also mark a shift away from her comments in September 2021 that “people who get their income through wealth should have to pay more”, highlighting those with stocks and shares and buy-to-let properties.
Labour has stepped up its focus on wooing the corporate sector, with the annual business forum hosted at the party’s conference this autumn over-subscribed by 75%, with 200 delegates due to attend, compared with 130 last year, and 150 on the waiting list.
Reeves was asked in the interview whether Starmer’s pledge to increase the top rate of income tax had been ditched. She replied: “Yeah … I don’t see a route towards having more money for public services that is through taxing our way there.
“It is going to be through growing our way there. And that’s why the policies that we’ve set out are all about how we can encourage businesses to invest in Britain.”
She added of the prospect of any form of wealth tax: “We won’t be doing that. It’s a denial.” A Labour source told the newspaper that her words also applied to “any form of mansion tax”, which the party proposed under Ed Miliband before the 2015 election.
As recently as the party’s conference last September, Starmer had said it was “hugely divisive” of ministers to hand out a tax cut to people who were paid more than £150,000, as he pledged to reverse the scrapping of the additional rate on the highest earners.
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However, in June he said that he was “not looking to the lever of taxation” and would try to avoid imposing further tax increases beyond a list of smaller levies his party has already announced.
Labour has said it is still committed to scrapping non-dom tax status, closing a tax loophole enjoyed by a small number of private equity fund managers, adding VAT to private school fees and cracking down on tax avoidance.
The leftwing campaign group Momentum said on X, formerly known as Twitter: “Four people in this country have more wealth than 20 million Britons. Meanwhile, capital gains are taxed lower than income.
“This is a political choice to favour big business and the one per cent over ordinary people. Shameful.”