Kemi Badenoch warns today that Labour is plotting a tax raid on homes for the billions needed to fill the fiscal black hole.
The Tory leader says Rachel Reeves saw property as a ‘cash machine’ to plug the gap in the public finances.
The Chancellor is coming under pressure from both flanks of the Labour Party to bring in a ‘wealth tax’.
She must find £50billion in tax rises or spending cuts to balance the books, the National Institute of Economic and Social Research (NIESR) said last week.
Writing in the Daily Mail, Mrs Badenoch warns that Labour could change council tax bands or introduce a tax on the value of land, adding: ‘A home is more than bricks and mortar. It is the reward for years of hard work, saving and sacrifice. It is security for our families. And it should not be treated like a cash machine for the Chancellor.’
She says a plan by Labour’s Welsh government to target property wealth by revaluing homes and pushing them into higher council tax bands could be introduced in England.
And she raised concerns Labour could adopt a suggestion in the NIESR report that the party should introduce a ‘land value tax’. The respected think-tank said the Chancellor should consider reforming council tax or even replacing it altogether with a land value tax.
This tax, once championed by the party under Jeremy Corbyn, would replace stamp duty and council tax by introducing a flat levy on the price of land.
Kemi Badenoch warns that Labour could change council tax bands or introduce a tax on the value of land
Badenoch raised concerns Labour could adopt a suggestion in the NIESR report that the party should introduce a ‘land value tax’
This tax, once championed by the party under Jeremy Corbyn, could be brought in by Prime Minister Keir Starmer
The idea was last seriously proposed by David Lloyd George in 1909, but fears that it could become a new poll tax have deterred successive governments. Ms Reeves is under pressure from the Left and Right of her party to reform property taxes as MPs warn that the current system is unfair.
Blue Labour, an influential faction within the party that is economically Left wing but culturally conservative, wants an overhaul of taxation on homes.
Earlier this year it urged the Chancellor to consider changing council tax rules so that poorer parts of the country were not hit unfairly, adding: ‘Our tax system needs reform to reflect new realities, including that most value is tied up in land and assets rather than income.
‘We should consider taxes on assets, and updating council tax bands to ensure it no longer disproportionately hits those in poorer parts of the country.’
Mr Corbyn’s new party is expected to call for a land value tax to replace council tax. Other supporters include Labour peer Dame Margaret Hodge, Tory chairman Kevin Hollinrake and the TaxPayers’ Alliance. But a Treasury source had ‘not heard’ that such a tax might come in.
Housing Secretary Angela Rayner is planning the biggest shake-up of local government funding in more than a decade to divert money from the South to more deprived areas.
The Treasury said: ‘The best way to strengthen public finances is growing the economy, which is our focus. Thanks to our planning reforms, the Office for Budget Responsibility has said the economy is expected to grow by the end of the decade.’
During the general election Labour said it was not planning to reform council tax and ruled out rebanding properties.
