A group of Labour MPs and two Labour peers have united with other political parties to urge the Chancellor, Rachel Reeves, to introduce an extreme wealth tax in the upcoming budget. The tax would consist of a 2% levy on assets valued at over £10m, which they believe would accrue £24bn per year. Supporters of the wealth tax also include the Greens, Plaid Cymru, the SDLP, Alliance and one Liberal Democrat MP.
The MPs argue that an extreme wealth tax is necessary given the increased wealth of billionaires, which has risen by almost £150bn in just two years (between 2020 and 2022), while revenue from other wealth taxes has remained at a standstill at around 3.4%. The richest 1% of Britons hold more wealth than 70% of the UK population, according to the Oxfam research which has been flagged in the letter of MPs. “Austerity is, and always has been, a political choice,” said Zarah Sultana, one of the MPs supporting the tax. “It is grossly unfair that children and pensioners are being pushed into poverty while billionaire wealth continues to grow.”
In addition to their request for a wealth tax, the MPs and peers are also calling for equalisation of capital gains tax (CGT) and income tax rates. They argue that the current tax system has put a disproportionate burden on the working people who are subject to higher rates of tax. The equalisation of the two rates would generate up to £16.7bn annually.
The budget is taking place on Wednesday, 30th October. Government sources have already informed the BBC about the potential spending cuts and tax rises amounting to £40bn that are being considered. Reeves announced during the Labour Party’s Autumn Conference that there would be “no return to austerity” under this government, with a plan to increase government investment as a boost to growth. However, with the possibility of CGT and National Insurance increases, the Chancellor may struggle to bring in those wanting to help redistribute wealth in society.
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