Angela Rayner sent a memo to the Chancellor urging her to consider an array of tax rises to balance the books.
The Deputy Prime Minister set out proposals to reinstate the pensions lifetime allowance and change dividend taxes in the secret memo, The Telegraph reported.
She sent the suggestions, in a document that estimated the changes could raise £3billion to £4billion a year, to Rachel Reeves in March ahead of the spring statement.
The Chancellor has been adamant she will not turn to tax rises as part of the Government’s efforts to fund its policies.
Ms Rayner’s suggestions, in a memo titled “alternative proposals for raising revenue”, reportedly included reinstating the lifetime pensions allowance, which limited how much savers could put put in their pension pot before incurring a higher tax charge and was abolished under the Tories.
Ending the inheritance tax relief on shares for the Alternative Investment Market, raising the bank surcharge to 5%, and freezing the additional rate income tax threshold above £125,140 so more people would be dragged into a higher band were also among the proposals.
She also floated closing the commercial property stamp duty loophole and increasing the annual tax on enveloped dwellings, as well as raising rates on dividend taxes to bring them closer to income tax and removing the tax-free dividend allowance.
There have been reports that Ms Rayner has been pushing back against spending cuts behind the scenes.
Allies of the deputy PM are becoming increasingly frustrated with having to publicly defend Treasury spending and are privately pushing back, according to The Telegraph.
A Government source said it is normal practice for Cabinet colleagues to have such discussions and they should not be read as an endorsement of any particular idea or proposal.
A Government spokesperson said: “We don’t comment on leaks.”
It comes amid anger among Labour backbenchers over the spending squeeze, with Sir Keir Starmer facing a Labour rebellions over planned £5billion-worth of welfare cuts and scrapping the universal winter fuel payment.
Some 100 Labour MPs - more than a quarter of the party’s parliamentary numbers - are reported to have signed a letter urging ministers to scale back welfare cuts under consideration.
In a separate, earlier letter, 42 MPs said the cuts were “impossible to support”.
The Work and Pensions Secretary will on Wednesday stand firm on Labour’s welfare cuts plans, arguing that reform is needed to make sure the system survives.
Liz Kendall is expected to say there is a “risk” the welfare state would collapse without the proposed changes, which include tightening the eligibility criteria for the main disability benefit in England, the personal independence payment (Pip).
Restricting Pip would slash benefits for about 800,000 people, while the sickness-related element of universal credit is also set to be cut.
