Andy Burnham has sparked fresh talk that he could bring in a new property tax which could hammer London.
The new Prime Minister described reforms to council tax by former Chancellor Rachel Reeves as a “start”.
Mr Burnham has previously backed a new property tax, to replace council tax and stamp duty, which would land London with an additional £7.5 billion bill.
Asked about tax on the wealthy, the PM told the BBC’s Panorama 'Andy Burnham: the Laura Kuenssberg Interview’: “There are people here in Greater Manchester who pay a much higher council tax than people living in much larger homes in London.”
Speaking at his new No10 North headquarters in Manchester, he added: “So the Chancellor before, Rachel Reeves, was right to start to reform council tax to create some fairness there in relation to people in homes that are of much greater value, who haven't seen their council tax go up over the years because of the failure to revalue the banding.”
Ms Reeves introduced the “mansion tax” on properties worth £2 million or more, with the vast majority of homes impacted by the new levy being in the capital or the wider South East.
Sir Keir Starmer’s government also slashed central government funding allocations for some London boroughs, including Westminster, forcing them to substantially raise council tax.
Former Greater Manchester Mayor Mr Burnham has previously supported a proportional property tax (PPT) advocated by the Fairer Share campaign which would replace council tax and stamp duty.
It would be charged at 0.48% of the value of a property, rising to 0.96% for empty homes, second homes and those owned by foreign nationals.
The capital would be the only area in the country which would end up paying more under the new system.
Shadow housing secretary Sir James Cleverly said: “Andy Burnham and Labour are just looking for more ways to tax Middle England, and raise taxes on people’s homes.”
London experts argue that the property tax system needs reforming.
But they have warned that the proposal backed in the past by Mr Burnham would unfairly penalise the capital, adding £800 to the property tax bill on homes worth £600,000.
Downing Street denied that the PPT was being “actively considered” by the new Government.
A No10 source said: “Suggestions that scrapping council tax or stamp duty is under active consideration by this Prime Minister are not true.”
The row comes as property prices in many London boroughs are falling, with nearly £250,000 wiped off the average value of homes in Westminster in a year.
Mr Burnham has vowed to stick to Labour’s election manifesto pledge not to raise the rate of income tax, VAT or National Insurance for employees.
But he has also signalled that he may put up taxes on the better off as he seeks to ease the cost of living, possibly by increasing the £12,570 threshold for starting paying income tax.
“So, you know, there are big decisions ahead,” he said.
“I need to be very prudent when it comes to the public finances.”
He explained further: “I will stick to the fiscal rules.
“People try and create a sense that I won't take that cautious approach, I will take that cautious approach.”
However, Mr Burnham has unveiled highly ambitious plans to deliver the “biggest devolution of power in modern times”, to roll back 40 years of “neo-liberalism” with the state being given a greater role, and to embark on the largest council homes building programme in the post-war period.
He is expected to channel billions more pounds in public spending to boost England’s regions.
However, he is yet to say how he will fund his landmark reforms.
He has announced a string of early measures to reduce the cost of living, such as axing VAT from electricity bills, but even the funding for some of these has not been nailed down.
