RACHEL Reeves is set to reject introducing a wealth tax despite pressure from left-wing MPs in the Labour Party.
The Chancellor has come under renewed pressure to levy a new tax on the savings, investments and property of the wealthy and in recent weeks senior Labour figures have refused to rule out the prospect.
Transport Secretary Heidi Alexander refused to be drawn on the issue earlier this month by the BBC's Laura Kuenssberg, while Keir Starmer also declined to rule out the measure at PMQs after Tory leader Kemi Badenoch accused him of "flirting" with the idea.
But Cabinet ministers have reportedly told The Times that a wealth tax is a “non-starter”, alleging wealthy people would simply leave the UK because of it.
“Wealth taxes don’t work,” one cabinet minister said. “Just look at what’s happened in other countries that have introduced them. They just don’t raise money, certainly not the kind of money that we’re looking for.”
Another cabinet minister said a wealth tax was “off the table”. They said: “Wealthy people are mobile, they can move their assets to other more favourable jurisdictions.”
Another government source did say though that Reeves is reluctant to rule out a wealth tax publicly. They said that other options, such as increasing capital gains tax, remain under consideration.
Reeves is preparing to raise taxes in the Autumn Budget after the Government was forced by Labour MPs to abandon welfare cuts and partially reinstate the Winter Fuel Payment.
The U-turn on both policies is expected to cost more than £6 billion.
The Office for Budget Responsibility, the official forecaster, is also expected to downgrade Britain’s growth prospects.
Earlier this month ex-Labour leader Neil Kinnock suggested Reeves should bring in a wealth tax, alongside ex-Welsh Labour leader Mark Drakeford.
Kinnock claimed it could bring in as much as £11bn for the Treasury.
Eight nations have introduced wealth taxes but have subsequently scrapped them including Austria, Denmark, Germany, Finland, Iceland, Luxembourg, Sweden and France.
However, four countries have retained wealth taxes in Norway, Spain, Switzerland and Colombia.
The Chancellor has little wriggle room in the Autumn Budget because of Labour’s manifesto pledge not to increase taxes on “working people”, encompassing income tax, VAT and National Insurance.
Reeves was accused of breaching the pledge last year when she increased employers’ National Insurance contributions to raise £24bn.
