A former Labour minister has said she wants Rachel Reeves to consider the “evidence” behind introducing a wealth tax in the UK.
Anneliese Dodds, who quit as international development minister in February over Sir Keir Starmer’s decision to slash the overseas aid budget, said she believed it was “important” that the government considers “who has the broadest shoulders”.
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Speaking to Beth Rigby on the Sky News Electoral Dysfunction podcast, Ms Dodds, the MP for Oxford East, said there had been a “lot of discussion” about a wealth tax – a direct levy on all, or most of, an individual’s, household’s or business’s total net wealth, rather than their income.
Ms Dodds, who also served as shadow chancellor when Labour was in opposition, said she had been “a bit sceptical about some of those claims for a long time because, of course, wealth is taxed in the UK”.
However, she said work carried out by the Wealth Tax Commission in 2020 had looked at various types of international wealth taxes and how it would be possible to deliver one in a UK context.
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She added: “I would hope the Treasury is considering that kind of evidence, as well as other changes that have been put forward.”
The former cabinet minister also said that tax proposals outlined by Deputy Prime Minister Angela Rayner to Rachel Reeves should be “considered”.
In a memo that was leaked to the Daily Telegraph in May, Ms Rayner suggested to the chancellor that she increase taxes, including reinstating the pensions lifetime allowance and a higher corporation tax level for banks.
“We’ve seen the deputy leader of the Labour Party, for example, put forward suggestions as I understand it,” Ms Dodds said.
“I think it’s important for all of those to be considered now.”
Ministers have signalled they will not bring in a wealth tax to balance the books, with Business Secretary Jonathan Reynolds branding the suggestion “daft”.
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Speaking to GB News last week, Mr Reynolds said: “This Labour government has increased taxes on wealth as opposed to income – the taxes on private jets, private schools, changes through inheritance tax, capital gains tax.
“But the idea there’s a magic wealth tax, some sort of levy…that doesn’t exist anywhere in the world.
“Switzerland has a levy, but they don’t have capital gains or inheritance tax. There’s no kind of magic. We’re not going to do anything daft like that.
“And I say to people: ‘Be serious about this.’ The idea you can just levy everyone. What if your wealth was not in your bank account, what if it was in fine wine or art? How would we tax that? This is why this doesn’t exist.
“There’s a lot of populism out about this, and I’m frustrated. I see colleagues sometimes say this in parliament and I say: ‘Come on, get serious.'”
Ms Dodds said that while she had not spoken directly with Ms Reeves about a wealth tax, she believed the “trade-off we have to consider in a world of lots of difficult trade-offs is potentially making some big and significant changes early, or having to make many tactical changes through the parliament and potentially being forced into some of those difficult decisions anyway later on”.
