Former health secretary Wes Streeting has called for a “wealth tax that works” as part of his bid to become Labour leader, aiming to win over the party’s left wing. The proposal would equalise capital gains tax with income tax, arguing the current system penalises work and is unfair.
Streeting, who quit the cabinet last week and called on the prime minister to go, said a member of his family who works as a cleaner pays a higher tax rate on her salary than her landlord pays on the growing value of her home. “The system is penalising work. It’s not fair and it’s bad for our economy,” he told the BBC.
Under the plan, capital gains tax would rise from the current 24% to 40% for higher-rate taxpayers and 45% for additional-rate taxpayers. Streeting said the change could raise up to £12bn a year, citing calculations by the Centre for the Analysis of Taxation. He added that the package would include lower rates for genuine entrepreneurs and close loopholes used to disguise income as capital gains.
The proposal has drawn criticism from former Treasury minister Lord O’Neill, who said it was “not a good idea” for a nation trying to boost growth. However, tax expert Dan Neidle backed the plan, describing it as a “good proposal” and noting that Nigel Lawson, Margaret Thatcher’s chancellor, held a similar view.
Streeting’s intervention is seen as an attempt to fend off a challenge from Andy Burnham, who is trying to return to Westminster. Polling earlier this year showed 91% of Labour members think the government should tax the rich more.
