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Rachel Reeves, UK shadow chancellor, has vowed that an incoming Labour government would not hammer the wealthy, in the latest attempt to stress the party’s commitment to fiscal discipline.
Reeves confirmed Labour had “no plans for a wealth tax”, ruling out higher levies on capital gains and property income, as she stepped up her party’s wooing of business and wealth creators.
Rishi Sunak, prime minister, is under pressure from within his party to make tax a key dividing line with Labour at the next election, with Tory MPs clamouring for him to announce tax cuts ahead of polling day.
Reeves is determined not to allow the Conservatives to rerun previous election campaigns, which have focused on alleged “tax bombshells” that would detonate if Labour was elected with unfunded spending plans.
Speaking to the Sunday Telegraph, Reeves said Labour had no need to levy any form of wealth tax because her party would be rigorous in holding down public spending.
In 2021, Reeves criticised a plan by Sunak, then chancellor, for a £12bn hike in national insurance to fund the NHS and social care. She had previously said it would be better to tax “people who get their income through wealth”.
Reeves specified at the time that this referred to “people who get their incomes through stocks and shares and buy-to-let properties”. But Sunak’s proposed tax hike was later scrapped by Kwasi Kwarteng, former prime minister Liz Truss’s shortlived chancellor.
“The government said they needed to raise £12bn and I said, well, why do you always have to come to working people and ask them to contribute more?” Reeves said.
“I don’t have any spending plans that require us to raise £12bn worth of money. So I don’t need a wealth tax or any of those things.” She added: “We have no plans for a wealth tax.”
With taxes already at their highest level since the second world war, Labour has made relatively few pledges to raise them further; a notable exception is the removal of tax breaks for private schools and non-domiciled UK residents.
Reeves also said two years ago that she would end a loophole used by private equity executives to reduce the amount of tax they pay on their share of the profits, known as carried interest.
In an interview with the Financial Times in Washington in May, Reeves joked she would not impose “a special FT reader tax”, adding that she had “no plans” to equalise capital gains tax rates with income tax, or to cut tax breaks on pension contributions for higher earners.
Conservative MPs believe that a promise of Tory tax cuts in the next parliament could be a potent issue at the next election and want chancellor Jeremy Hunt to start the process now.
Hunt has warned Tory MPs not to expect big tax cuts at his Autumn Statement — he wants to focus on cutting inflation. However, the chancellor is expected to use his Spring 2024 Budget to kick-start the election campaign.
Labour has been courting business leaders and will host 200 people at the business forum at its conference in Liverpool in October, up from 130 last year. The party said 150 were on a waiting list.
The party has also doubled the amount of sponsorship of business activities at conference this year and expects to raise £500,000 compared with £200,000 last year.
