Wes Streeting has set out plans for a wealth tax as he continues to make his pitch for the Labour leadership. The former health secretary claimed the current system is not fair, penalises work, and demanded a radical transformation of the tax system.
Mr Streeting, who has vowed to stand in any leadership contest to replace Keir Starmer, called for capital gains tax to be equalised with income tax, a system he claims could raise £12 billion a year. Higher or additional rate taxpayers currently pay 24% on gains they make in the current financial year. Under Mr Streeting’s plans, that would be equalised with the income tax rate of 40% for higher rate taxpayers and 45% for additional rate taxpayers.
The package would also close the loopholes he claimed people use to disguise income from work as capital gains, such as establishing personal service companies or taking pay in shares.
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. A pound made from simply owning assets should not be taxed less than a pound made from a hard day’s work.”
The IFS, Resolution Foundation, Tax Policy Associates’ Dan Neidle, and the Labour Growth Group have all called for taxing gains at the same rate as income, but only above a fair return on the original investment, which this plan achieves. It comes a day after Mr Streeting warned in his resignation speech that Labour must change course or risk handing Reform UK the keys to Downing Street.
