25/10/24

UK: Dozen Labour MPs join call for 'extreme wealth' tax

As published on: msn.com, Friday 25 October, 2024.

A dozen Labour MPs have joined a cross-party call for an "extreme wealth" tax in this month's Budget.

The MPs have written to chancellor Rachel Reeves to demand a new 2% tax on assets worth more than £10m, which they claim could raise £24 billion per year.

The left wing Labour MPs and two Labour peers have joined forces with MPs suspended by Sir Keir Starmer, including former shadow chancellor John McDonnell, and former leader Jeremy Corybn, who was elected as an independent.

The call is also backed by the Greens, Plaid Cymru, the SDLP, Alliance and one Liberal Democrat MP.

The Labour Party has been asked for comment.

The chancellor is finalising details of her first Budget, to be announced on Wednesday 30 October. Government sources have told the BBC this will include tax rises and spending cuts to the value of £40bn.

In their letter to Reeves, the 30 MPs and peers say an extreme wealth tax is needed as billionaire wealth has increased by almost £150bn in only two years, between 2020 and 2022, but revenue from wealth taxes has remained stagnant at around 3.4%.

One of the MPs, Zarah Sultana, who represents Coventry South, flagged Oxfam research showing the richest 1% of Britons hold more wealth than 70% of the UK population.

"Austerity is, and always has been, a political choice," she said. "It is grossly unfair that children and pensioners are being pushed into poverty while billionaire wealth continues to grow.

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"We urgently need wealth taxes to rebalance power, fund essential public services and build a society where the needs of the many take precedence over the greed of a few."

Reeves told the party's autumn conference there would be "no return to austerity" under this government and promised a boost to government investment, designed to kickstart growth.

The MPs are also asking Reeves to equalise capital gains tax (CGT) and income tax rates in her budget.

They say this would "rectify unfairness in the tax system, where working people are subject to proportionately higher rates of tax", and raise £16.7bn per year.

At the election, Labour promised not to increase taxes on "working people", covering VAT (value added tax), income tax or National Insurance (NI), which limits the levers the chancellor can pull to bring cash in.

However, there has been speculation Reeves could increase CGT - charged on profits from the sale of assets like second homes - and also freeze the income tax threshold beyond 2028, potentially dragging more workers into the higher tax bands.

Sir Keir Starmer also did not rule out a National Insurance increase for employers in a BBC interview last week.

Reeves has already taken one unpopular decision, to remove winter fuel payments from 10m wealthier pensioners, which led to a rebellion by seven Labour MPs.

Sultana is one of five MPs who signed the wealth tax letter and who are currently suspended from the Labour Party for voting against the winter fuel payment cuts.

Some observers also wonder if the rebels, who were suspended for six months in July, may decide to team up with Corbyn's independent group in January rather than re-join Labour.

The Labour rebels have teamed up with four of the smaller Westminster parties, including Wales' Plaid Cymru and Northern Ireland's SDLP and Alliance groups, plus all four Green Party MPs.

Green co-leader Carla Denyer called on Reeves to reconsider Labour's decision to ditch its £28bn green investment pledge earlier this year, and invest more in public sevices.

"We cannot afford to have another government of spending cuts and economic hardship," she said.

"Labour’s first Budget must take a resolute step to ensure that those with extreme, unprecedented levels of wealth help foot the bill.”

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UK Labour Wealth tax