Former health secretary Wes Streeting has backed a “wealth tax that works” as part of his pitch to be Labour leader and win over the left wing of the party. The proposal would see capital gains tax equalised with income tax, as Mr Streeting insisted the current system is not fair and penalises work.
Speaking to the BBC on Wednesday, Mr Streeting said: “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. And we wonder why people are angry. The system is penalising work. It’s not fair and it’s bad for our economy. We need a wealth tax that works.”
Under Mr Streeting’s proposal, capital gains tax would be equalised with the income tax rate of 40 per cent for higher rate taxpayers and 45 per cent for additional rate taxpayers. He vowed to do it alongside measures to protect real entrepreneurs – with lower capital gains tax rates for those taking risks building companies – and long-term investment to boost economic growth. The package would also close loopholes used to disguise income from work as capital gains.
The plan could raise up to £12bn a year, he said, pointing to calculations by the Centre for the Analysis of Taxation. The proposal has been backed by tax expert Dan Neidle who described it as a “good proposal” for a tax which is simultaneously too high and too low. However, former Treasury minister Lord O’Neill told The Independent he was “very disappointed” at Mr Streeting’s call, adding: “We need to be stimulating and supporting genuine risk taking. Venture is exceptionally risky and it certainly shouldn't be taxed the same way as other forms of investment and finance, nor income tax.”
Mr Streeting’s latest intervention will be seen as a bid to win over the left wing of the Labour Party and see off the threat from Andy Burnham, who is currently attempting to return to Westminster and challenge Sir Keir Starmer. Mr Streeting quit the cabinet last week calling on the prime minister to go and making clear he intends to stand in any leadership contest.
