Blair Institute Opposes Capital Gains Tax Equalisation
Sir Tony Blair's think tank, The Tony Blair Institute for Global Change, has warned Andy Burnham against raising capital gains tax to income tax levels, calling it a 'terrible policy' that would undermine innovation and growth. The warning comes as the Makerfield MP, widely expected to replace Sir Keir Starmer as prime minister in weeks, faces calls to equalise the taxes to raise revenue.
Capital Gains Tax: Current Rates and Proposed Changes
Capital gains tax is levied on profits from selling investments or assets like second homes or shares. Currently, the annual profit threshold before tax applies is £3,000, with rates between 18% and 24%. Equalising with income tax rates of 20%, 40%, and 45% could raise £12 billion a year, according to the Centre for the Analysis of Taxation.
Warning Against Highest European Rate
Guy Ward-Jackson, senior analyst at the institute, warned that equalisation would give the UK the highest top capital gains rate in Europe at 45%. 'While everyone else is racing to attract entrepreneurial talent, we would be punishing them and making ourselves poorer as a result,' he wrote in The Telegraph, a piece reportedly backed by Sir Tony Blair. He argued the UK's economic problem is a 'risk-aversion crisis' and that capital gains tax relief helps correct disadvantages faced by UK founders compared to US counterparts.
Burnham's Stance on Tax
In his first interview since Sir Keir Starmer announced his resignation, Burnham said there was room for movement on tax despite pledging to keep Labour's 2024 manifesto commitments not to increase workers' income tax, national insurance, or VAT. He told LBC he could increase taxes on warehouses to help high street businesses like pubs. Former health secretary Wes Streeting, tipped for Burnham's Cabinet, has called for capital gains tax alignment with income tax, while top Burnham backer Louise Haigh has also supported bringing rates closer. Burnham's team has been contacted for comment.
