Wes Streeting is advocating for the implementation of a wealth tax, citing concerns about the current tax system being unjust towards working individuals.
The former Health Secretary is proposing to align capital gains tax rates with income tax rates, a move he believes could generate £12 billion annually. Presently, higher or additional rate taxpayers are taxed at 24% on their gains for the year. Streeting’s proposal aims to match this with the income tax rates of 40% for higher rate taxpayers and 45% for additional rate taxpayers. Additionally, the plan seeks to eliminate loopholes that allow people to disguise work income as capital gains, such as through the use of personal service companies or compensation in shares.
Streeting emphasized the need for reform by highlighting a personal example: his family member, a cleaner in Lancashire, pays a higher tax rate on her earnings compared to what her landlord pays on the appreciating value of her residence. He argued that the current system unfairly penalizes hard work and hinders economic progress, advocating for a fair wealth tax where income from assets is not taxed less than income from labor.
Various organizations including the IFS, Resolution Foundation, Tax Policy Associates, and the Labour Growth Group have supported the idea of taxing gains at the same rate as income, but only exceeding a reasonable return on the initial investment.
Despite mounting pressure, the Labour party has consistently resisted calls to increase taxes on the ultra-wealthy as a strategy to bolster government revenues and achieve fiscal balance. Rachel Reeves previously defended the government’s taxation approach, claiming it appropriately targets those with the most resources. Notably, a prominent taxpayer, Dale Vince, proposed a 2% tax on assets exceeding £10 million, estimating an annual revenue of £24 billion affecting a small portion of the population.
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