PM Keir Starmer and chancellor Rachel Reeves refuse to say which taxes they will hike in Labour’s Halloween Budget on October 30. But they’ve got a little list.
There’s a reason why the Labour Party didn’t tell us which taxes it would hike during the election (Image: Getty)
During the general election, Labour ruled out increasing income tax, national insurance and VAT, but that still leaves plenty of taxes to go at. And as I’ve written recently, left-wing think tanks are full of ideas.
The Resolution Foundation is particularly influential. Its boss Torsten Bell is now a Labour MP, and earmarked for rapid promotion through the party’s ranks.
It has issued its tax demands in a string of policy documents and tweets, claiming they will tackle the two biggest challenges facing the UK: low growth and high inequality.
It doesn’t have many practical suggestions for boosting growth, but has big plans to reduce inequality. They boil down to taxing anyone with a modicum of wealth.
I was astonished to see just how many taxes the Resolution Foundation wants beefed up. If Reeves listens, they could come into force in just six weeks.
Here’s what the Resolution Foundation wants Labour to do. Brace yourselves, it’s a lengthy list.
As I recently reported, it wants Reeves to increase inheritance tax receipts by scrapping the £175,000 residence nil-rate band, worth a maximum of £350,000 per family.
It has also suggested slashing the £325,000 nil-rate IHT band to just £125,000, and imposing IHT on all lifetime gifts above £3,000 a year.
It also wants to slap IHT on unused pension savings on death, and axe business and agricultural property reliefs.
And that’s only for starters.
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The Resolution Foundation also wants to increase capital gains tax (CGT) on share sales to 37%, and to a whopping 53% on sales of buy-to-let properties and second homes.
It also wants what has been dubbed a double death tax, charging both CGT and IHT on capital gains when people die.
As I highlighted yesterday, it’s urging Reeves to charge CGT on Brits leaving the UK, as many surely will when they see what Labour has in store for them.
The Resolution Foundation isn’t done yet.
It wants buy-to-let landlords to pay national insurance on rental income, which they don’t at the moment. The self-employed should pay more NI, too.
It also wants to hike the basic rate of dividend tax from 8.75 to 20%.
Don’t think our pensions will go untouched, either. The Resolution Foundation wants to cut the £270,000 cap on the 25% tax-free lump sum to £100,000, or possibly lower.
Motorists will be in for it too, as it wants to scrap the 5p temporary cut in fuel duty, another hike I’ve warned about. Then it would increase the levy by 2% every year.
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Oh yes and the Resolution Foudation also wants to introduce pay-per-mile road duty for electric vehicles.
That’s quite a shopping list (and there’s more). My head was reeling at the end of it. It feels like a wholesale nationalisation of private wealth.
I don’t expect Reeves to introduce all these taxes at once. If she did, it would be the longest Budget of all time. As well as the most hated.
But I could see every single one coming into force during five long years of Labour rule.
So will this boost growth and reduce inequality?
I can’t see it boosting growth, quite the reverse. Will people bother to work hard and build wealth if Labour snatches it away at every opportunity?
It may reduce wealth inequality, though. By making everyone equally poor.
