Labour's leadership contest took a significant turn to the Left today as Wes Streeting, the former health secretary and perceived Blairite candidate, called for a wealth tax on the 'rich' that could generate £12 billion annually.
The intervention comes amid nervous markets bracing for a potential 'bidding war' within Labour that could push the party towards more extreme policies. Key figures are preparing for a contest to replace Keir Starmer within months, regardless of the outcome of the Makerfield by-election on June 18, where Andy Burnham is a candidate.
Rachel Reeves has already increased the tax burden to a record high, squeezing growth and investment, and there are concerns that a new spending spree could escalate the costs of servicing the UK's debt mountain.
In an interview with the BBC's Political Thinking podcast, Mr Streeting outlined his tax increase plans. He stated: '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.'
He added: 'The system is penalising work. It's not fair and it's bad for our economy. We need a wealth tax that works. A pound made from simply owning assets should not be taxed less than a pound made from a hard day's work.'
Currently, higher or additional rate taxpayers pay 24 per cent on gains made in the current financial year. Under Mr Streeting's proposal, this 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 implement this alongside measures to protect genuine entrepreneurs, including lower capital gains tax rates for those taking risks to build companies, and long-term investment to boost economic growth. The package would also close loopholes used to disguise income from work as capital gains, such as establishing personal service companies or taking pay in shares.
Mr Streeting claimed the plan could raise up to £12 billion a year, citing calculations by the Centre for the Analysis of Taxation.
However, the boss of a London hedge fund told the Daily Mail: 'I was optimistic Wes Streeting might be OK but he's clearly an idiot, too. How do you sell a business if the stock market is broken? Why can't these clowns understand that if you keep driving out the wealth creators there will be no one left to fund their mad socialist policies?'
Mr Streeting's intervention comes a day after he warned in his resignation speech that Labour must change course or risk handing power to Reform UK, and after he quit the Cabinet last week calling on the Prime Minister to go.
