Former health secretary Wes Streeting has unveiled plans for a wealth tax that would align capital gains tax rates with income tax, as he positions himself for a potential Labour leadership bid. Streeting, who has made clear his intention to stand in any contest to replace Sir Keir Starmer, argues that the current system unfairly penalises work.
Proposal Details
Under Streeting's proposal, higher-rate taxpayers, who currently pay 24% on capital gains, would see their rate rise to 40%, while additional-rate taxpayers would face a 45% rate, matching income tax bands. The plan could generate up to £12 billion per year, according to calculations by the Centre for the Analysis of Taxation.
Fairness and Economic Growth
Streeting emphasised the unfairness of the current system, stating: "A member of my family is a cleaner in Lancashire. She pays a higher tax rate on her salary than her landlord pays for the growing value of the home she lives in. She slogs her guts out, he puts in far less effort, yet the state rewards him more than her." He added that the system "penalises work" and is "bad for our economy."
To protect genuine entrepreneurs, Streeting vowed to introduce lower capital gains tax rates for those taking risks to build companies, alongside measures to encourage long-term investment. The package would also close loopholes used to disguise employment income as capital gains, such as through personal service companies or share-based remuneration.
Political Context
Streeting's intervention follows his resignation from the Cabinet last week, when he called on Prime Minister Keir Starmer to step down. In his resignation speech, he warned that Labour must change course or risk handing power to Reform UK. The wealth tax proposal is seen as a key plank of his leadership platform, aiming to address public anger over perceived inequities in the tax system.
