A LABOUR minister has refused to rule out tax rises in the Budget and claimed the Government will be guided by “fairness”.
Rumours of an incoming wealth tax were spurred after Keir Starmer ignored a question from Tory leader Kemi Badenoch on the topic at Prime Minister's Questions last week.
On Sunday, Transport Secretary Heidi Alexander refused to be drawn on the issue by the BBC's Laura Kuenssberg.
Alexander did say that Cabinet ministers did not “directly” talk about the idea of a wealth tax during an away day at the Prime Minister’s Chequers country estate this week.
According to the Financial Times (FT), analysts have suggested Chancellor Rachel Reeves will have to plug a £20 billion black hole in the public finances. This was made deeper by the £6.2bn cost after the UK Government was forced to U-turn on its planned cuts to disability benefits after a backbench revolt.
After committing not to increase income tax, VAT, and employee payroll tax in its manifesto, Reeves will have to find other ways to balance the books.
The Chancellor has refused to rule out tax rises at the budget since ministers were forced into the U-turn.
Scottish Labour leader Anas Sarwar has previously said that introducing a wealth tax would be the “wrong solution”.
But, former Labour leader Neil Kinnock has called for a two per cent annual levy on assets over £10m, claiming this could raise about £10bn a year.
Unite has called for a one per cent wealth tax on the super rich, while Scottish Greens leadership contender Ross Greer called for one to be introduced in Scotland as he launched his campaign last week.
Meanwhile, economists have warned Reeves on several occasions that her fiscal headroom – the leeway within the Government’s self-imposed spending rules – could be eroded by unexpected economic turns.
Asked by Sky News if such a tax had been discussed at the Cabinet away day on Friday, Alexander said: “Not directly at the away day.”
Pressed on what she meant by not directly, the minister replied: “I think your viewers would be surprised if we didn’t recognise that, at the Budget, the Chancellor will need to look at the OBR forecast that is given to her, and will make decisions in line with the fiscal rules that she has set out.
“We made a commitment in our manifesto not to be putting up taxes on people on modest incomes, working people. We have stuck to that.”
Asked again if this meant there will be tax rises in the budget, Alexander replied: “So, the Chancellor will set her Budget. I’m not going to sit in a TV studio today and speculate on what the contents of that Budget might be.
“When it comes to taxation, fairness is going to be our guiding principle.”
In response, shadow home secretary Chris Philp told Sky News’s Sunday Morning With Trevor Phillips: “That sounds to me like a barely disguised reference to tax rises coming in the autumn.”
Philp said tax rises were now being discussed due to the economy shrinking in consecutive months, unemployment being 12 per cent higher than when Labour came to office, and that the Government had “completely failed” to reform welfare.
He added: “They can’t get anything past their own backbenches. The consequence of all of that is going to be tax rises for people who are working hard and on businesses.
“It’s nothing to do with fairness, it’s a symptom of Labour failure.”
