A former Labour minister has piled further pressure on Rachel Reeves to bring in a ‘wealth tax’ in Britain.
Anneliese Dodds, the ex-international development minister, suggested the Chancellor should target those with the ‘broadest shoulders’ as she looks to balance the books.
The Government’s U-turns over welfare reform and winter fuel payments have left Ms Reeves with a multibillion-pound black hole to fill in the nation’s finances.
This has fuelled speculation she might target the assets of the wealthy in her next Budget this autumn, when further tax rises are widely expected.
The Chancellor has not ruled out the possibility of a new wealth tax but has insisted she will stick to her commitment not to hike tax for ‘working people’.
Ms Dodds suggested spending cuts would not ‘deliver the kind of fiscal room that is necessary’ as she became the latest Labour figure to support a levy on the richest.
Others in the Labour Party, including former leader Lord Neil Kinnock and Wales’s First Minister Baroness Eluned Morgan, have also called for a wealth tax.
Trade union leaders, including Sharon Graham of Unite, are also pressuring ministers to consider the move.
Responding to Ms Dodds’ suggestion of a wealth tax, Ms Reeves said while on a visit to Scotland on Friday that the Government has ‘got to get the balance right on taxation’.
Anneliese Dodds, the ex-international development minister, suggested the Chancellor should target those with the ‘broadest shoulders’ as she looks to balance the books
The Government’s U-turns over welfare reform and winter fuel payments have left Rachel Reeves with a multibillion-pound black hole to fill in the nation’s finances
The Chancellor said: ‘Decisions around tax are decisions that are made at a Budget and we’ll make those decisions in the appropriate way.
‘But the number-one priority of this Government is to grow the economy. And that means bringing more investment into Britain, creating more good jobs paying decent wages here in Britain.
‘We’ve got to get the balance right on taxation because we want that investment, we want those jobs to come here.
‘That’s why we’re reforming the planning system, secured three trade deals in the first year of this Labour Government, cutting back on unnecessary regulation, and reforming our pension system to unlock money for businesses to be able to invest here in the UK.’
Ms Dodds quit her Cabinet role in February in protest at the Prime Minister’s decision to slash the international aid budget in order to pay for increased defence spending.
She is a former shadow chancellor and was also previously the Labour Party’s chair.
The MP for Oxford East argued it is ‘important’ for the Government to consider evidence set out by the Wealth Tax Commission, which looked at whether such a tax would be desirable and deliverable in the UK.
In its final report, released in 2020, the Commission said a one-off wealth tax on millionaire couples paid at 1 per cent a year for five years would raise £260 billion.
Speaking to Sky News’ Electoral Dysfunction podcast, Ms Dodds said the work undertaken by the Commission ‘has changed the debate’.
‘They looked at the operation of lots of different wealth tax,’ she added.
‘They looked at all of that evidence and set out how it would be possible to deliver something like that in a UK context.
‘I would hope that the Treasury is considering that kind of evidence as well as other changes that have been put forward.’
Ms Dodds also said that tax proposals outlined by Deputy Prime Minister Angela Rayner to Ms Reeves should be ‘considered’.
In a memo that was leaked to The Telegraph in May, Ms Rayner suggested to the Chancellor that she increase taxes.
This included reinstating the pensions lifetime allowance and a higher corporation tax level for banks.
‘We’ve seen the Deputy Leader of the Labour Party, for example, put forward suggestions,’ Ms Dodds said. ‘I think it’s important for all of those to be considered now.’
On Ms Reeves’ approach to welfare, Ms Dodds said: ‘An attempt was made to deal with a quite immediate problem, but I don’t think you can, particularly via cuts, actually deliver the kind of fiscal room that is necessary.’
‘It may make sense tactically, but strategically a longer-term approach is needed and that’s the the big issue that the Government has to face up to,’ she added.
A tax on the wealthy has not been formally ruled out by ministers, but Business Secretary Jonathan Reynolds branded the idea as ‘daft’ in June this year.
‘This Labour Government has increased taxes on wealth as opposed to income – the taxes on private jets, private schools, changes through inheritance tax, capital gains tax,’ he told GB News.
‘But the idea there’s a magic wealth tax, some sort of levy… that doesn’t exist anywhere in the world.
‘Switzerland has a levy but they don’t have capital gains or inheritance tax. There’s no kind of magic (tax). We’re not going to do anything daft like that.
‘And I say to people: ‘Be serious about this.’ The idea you can just levy everyone… What if your wealth was not in your bank account, (what if it was) in fine wine or art?
‘How would we tax that? This is why this doesn’t exist.’
