At last! We will face an election this year and, whenever it’s called, the government will weaponise tax: depicting Labour as the party of high taxation. 

That may seem a tad hypocritical given that taxes under the Tories will still be the highest ever in the UK despite Jeremy Hunt’s two per cent cut to National Insurance; a tax cut, which will be paid for by planned cuts in public spending.

A tax trap for Labour? It shouldn’t be. The question of taxes, high or low, should, be framed completely differently. The question should be: is tax fair? Should an increase in tax fall on the poorest or the richest?

Jeremy Hunt, Chancellor of the Exchequer, has answered that question. According to the New Economic Foundation (NEF) freezing tax thresholds, now continued to 2028, “will result in the effective tax rate rising five times more for lower earners compared to higher earners”. 

Rachel Reeves, Shadow Chancellor of the Exchequer, answered that same question in her speech to the Labour Party conference in 2021 when she said it wasn’t fair that unearned income should be taxed lower than earned income. She stated: “That will not stand with Labour. I pledge that as Chancellor I will not be balancing the books on the backs of working people.”

Now, rather than tax wealth, Labour plans to grow the economy to provide the resources we need. And Labour has a good industrial strategy to achieve that. But that will take time, a long time, and we simply don’t have time to wait for growth to remedy 13 years of Tory cuts and underfunding of public services.

Only taxing wealth can provide the resources we need now. That means going much further than small measures such as taxing non-doms. 

Closing tax loopholes could raise £7-billion a year, and Labour haven’t ruled that out. Equalising capital gains and income tax rates could raise £15.2-billion a year. TaxJustice.UK say that just six wealth taxes could raise £50-billion. That is the sort of money needed.

A recent YouGov poll found that 78 per cent of voters support an annual wealth tax on those with assets of over £10-million, including 77 per cent of Conservative voters and 86 per cent of Labour voters, while a further 62 per cent supported equalisation of tax rates on income from work and income from wealth. 

Labour doesn’t have to fear a Tory tax trap. It just needs to be honest: taxes will need to rise but they must be fair. The public support fair wealth taxes — not austerity.

And there is a cast iron case for it. Britain in the 1970s was one of the most equal of rich countries. Today it is the second most unequal, after the US.  

of South East Cornwall Labour Party