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<\/p>\nShould we believe Shadow Chancellor Rachel Reeves when she says a Labour government would rule out all possible forms of a wealth tax if it wins the next election?<\/p>\n
I’d like to. I really would. Labour will probably be in power in little more than a year. It would be better for the country if it didn’t set about fleecing the better-off, who have scarcely been indulged by the Tories.<\/p>\n
But given Sir Keir Starmer’s and Ms Reeves’s previous utterances, it’s hard to accept they have suddenly seen the light. The Labour leader undertook in 2020 to increase the top rate of income tax, which stands at 45 per cent.<\/p>\n
As for Rachel Reeves herself, as recently as September 2021 she said that ‘people who get their income through wealth should have to pay more’. Yet in an interview with the Sunday Telegraph, she now declares \u2014 only two years later \u2014 that there won’t be a mansion tax or higher capital gains tax or any increase in the top rate of income tax.<\/p>\n
Even if she now means what she says, once in government Labour would soon feel the necessity for extra tax revenue to pay for various items on its shopping list, and to keep its friends in the trade unions happy.<\/p>\n
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STEPHEN GLOVER:\u00a0Should we believe Shadow Chancellor Rachel Reeves when she says a Labour government would rule out all possible forms of a wealth tax if it wins the next election?<\/p>\n
There was a good example yesterday morning. Shadow Health Secretary Wes Streeting has come up with the idea of paying GPs more in order to allow patients to see the doctor of their choice. It sounds a reasonable plan. It is also bound to cost money.<\/p>\n
Yet when Shadow Employment Secretary Justin Madders was interviewed on yesterday’s Radio 4 Today programme, he argued that it would be possible to pay GPs more without increasing public expenditure. As he put it, ‘the pots will remain the same’.<\/p>\n
Come off it! This is fantasy economics. If you pay GPs more for supplying an extra service, more cash will have to be found. Either Mr Madders is stupid, or he thinks we are.<\/p>\n
No, a future Labour government would end up by soaking the rich, whatever the party’s intention may be now. It’s notable that Rachel Reeves sounded less than enthusiastic when ruling out new wealth taxes. She didn’t display evangelical fervour.<\/p>\n
She could have said something like: ‘I think the better-off already pay high tax, and I don’t want to increase the burden on them.’ What she in fact said was: ‘I don’t have any spending plans that require us to raise \u00a312 billion. So I don’t need a wealth tax or any of those things.’<\/p>\n
She doesn’t need a wealth tax. It’s not that she is opposed to it in principle. She just doesn’t have any spending plans right now that require her to squeeze the more affluent. If her spending plans change, so will her views about the desirability of a wealth tax.<\/p>\n
Even more equivocal was Anneliese Dodds, Ms Reeves’ predecessor as Shadow Chancellor, and somewhat to her Left. She was interviewed on Radio 4 on Sunday morning.<\/p>\n
Ms Dodds sounded lukewarm about ruling out tax increases for the better-off, and emphasised that Labour would charge VAT on private school fees and hammer the ‘non-doms’ \u2014 residents in this country whose permanent home is outside the UK, and don’t pay tax here on their earnings abroad.<\/p>\n
Labour is striving to reassure voters with the impression that it isn’t wedded to high tax \u2014 hence Rachel Reeves’s announcement. But the truth is that it has no ideological objection to wealth taxes.<\/p>\n
Imagine that Labour has a modest overall majority after the election. Left-wingers on its backbenches would soon put pressure on the leadership for higher wealth taxes in return for their continuing support. They might discover they were pushing at a half-open door.<\/p>\n
We are entitled to be sceptical about Rachel Reeves’ intervention. What she said was not credible, which can be fairly said of most of Labour’s economic plan. There was also a gaping hole that should alert voters.<\/p>\n
For whilst promising, albeit unconvincingly, not to target the comfortably off, she made no undertaking to reduce the tax burden on the 80 or 90 per cent of the population that has nothing to fear from taxes on wealth.<\/p>\n
Britain has the highest ever taxes in its peacetime history. This is an extraordinary state of affairs. I realise, of course, that more than \u00a3400 billion was spent during the pandemic. Some of that was recklessly splashed about by a Tory government that should have shown more restraint.<\/p>\n
In effect, Ms Reeves was telling the Sunday Telegraph that the wealthier would be spared under Labour, at any rate for the time being, but that all taxpayers would have to struggle on without the prospect of any relief.<\/p>\n
Admittedly, she invoked the prospect of faster economic growth, without offering the faintest clue as to how this might be achieved. What is clear is that she doesn’t think it can be brought about by reducing taxes for middle earners.<\/p>\n
Labour’s prospectus can be summarised in the following way: No new wealth taxes for the better-off \u2014 for now. But everyone will have to go on paying tax at an unprecedentedly high rate for the foreseeable future.<\/p>\n
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STEPHEN GLOVER: The Chancellor, Jeremy Hunt, announced in his autumn statement in 2022 that the modest Capital Gains Tax annual allowance of \u00a312,300 would be halved to \u00a36,000 from April 2023, and then cut again to \u00a33,000 from April 2024<\/p>\n
This is a very dismal outlook. It should offer the Tories a wonderful opportunity. The trouble is that they are identified in the public mind as a high tax party, and give no sign of wishing to undo that impression.<\/p>\n
Let me choose an example that makes my blood boil. The Chancellor, Jeremy Hunt, announced in his autumn statement in 2022 that the modest Capital Gains Tax annual allowance of \u00a312,300 would be halved to \u00a36,000 from April 2023, and then cut again to \u00a33,000 from April 2024.<\/p>\n
This was a stake in the heart, but not for fat cats or the super-rich. Ordinary savers \u2014 people with a small share portfolio or a holiday home \u2014 were targeted by a Government that has the effrontery to describe itself as Conservative.<\/p>\n
I know the public finances are extremely tight. I understand that our annual debt repayment is more than twice the defence budget. But we won’t get out of the hole into which the Government has dug us by continually raising taxes.<\/p>\n
Annual public expenditure in the current financial year is set at \u00a31,189 billion. In view of the State’s dire record of maladministration and overspending, isn’t it likely that judicious cuts of 5 or 10 per cent to this fantastically large amount would be easily achievable?<\/p>\n
Such a question will never fall from the lips of Rachel Reeves. The tragedy is that we never hear Rishi Sunak or Mr Hunt speaking in such terms.<\/p>\n
I expect the Government will introduce modest tax cuts before the election. Good. But these mustn’t be seen as opportunistic. They should be designed to tell voters that, unlike Labour, the Tories support lower taxes in the long term.<\/p>\n
A pledge to cut or abolish inheritance tax would be a useful start. It is the most unpopular tax of all, hated even by people who have little prospect of having to pay it, since they grasp how unfair it is.<\/p>\n
Rachel Reeves and Sir Keir Starmer believe in high taxes. If Labour wins, everyone will pay them. The Tories’ challenge is to convince voters that they are different.<\/p>\n