Burnham ‘plans £38bn tax raid’
Surprise spending spree would pile pressure on new PM to call early election, Reform analysis suggests
TONY DIVER
Andy Burnham is to launch a £38 billion tax raid on the wealthy to fund a spending spree in office, analysis by Reform UK has found – taking Labour’s total tax increases to more than £100 billion a year.
A report into the Prime Minister-in-waiting’s pledges found Burnham would bring Labour’s total increase in taxation from around £66 billion to more than £100 billion a year.
This includes promises of a ‘care levy’ of up to 10% of the value of estates after death, reforming the rates of capital gains tax (CGT) and imposing National Insurance on landlords’ rental income.
Implementing a torrent of new taxes not mentioned in Labour’s 2024 manifesto will increase pressure on Burnham to call an early election. He is due to be elected unopposed as Labour leader and Prime Minister on Friday.
Robert Jenrick, Reform’s Economy Spokesman, said: “Andy Burnham has spent 20 years reaching for other people’s money – a death tax on family homes, a graduate tax on young people getting their first pay cheque, a £14 billion raid on savings and investment and new levies on everything from your parking space at work to your weekend away.
“Taken together with Rachel Reeves’s record, Labour could well raise more than £100 billion a year of tax rises. If Mr Burnham disputes this, the remedy is simple: rule these 10 taxes out, by name, today.”
The UK already has its highest tax burden on record, following raids by Rachel Reeves on employer National Insurance contributions, new VAT on private schools and a freeze to income tax thresholds.
Burnham has declined to set out detailed tax plans ahead of his first Budget but has pledged to remain within Labour’s fiscal rules, which require debt to be falling as a percentage of GDP.
However, he is considering appointing Ed Miliband, the Energy Secretary, as his Chancellor after taking office on July 20th, despite Labour MPs urging him to appoint a less controversial and more centrist figure like Wes Streeting or Shabana Mahmood.
On top of this, Burnham has hinted at a range of expensive spending plans that will require funding from taxation.
He has suggested he would support increasing the top rate of tax to 50% for the highest earners, which would amount to a breach of Labour’s 2024 manifesto not to raise income tax.
He has also refused to rule out a range of tax changes, including aligning CGT with income tax, which he said earlier this month he would “want to look at”.
Burnham is also considering lowering the threshold of Reeves’s ‘mansion tax’ on properties worth more than £2 million to just £1.5 million, which would drag many homeowners in London and the South East into higher rates of council tax.
A levy on landlords’ rental income would raise around £3 billion a year, according to the Institute of Public Policy Research (IPPR), although economists have warned the policy would lead to a restriction in the housing supply and higher rents for tenants.
Other suggestions Burnham has previously supported include a graduate tax to replace student loans, higher gambling duties, a workplace parking levy and greater powers for mayors to charge tourists for overnight stays.
In total, Reform said the policies would bring the tax increases from Sir Keir Starmer and Burnham’s governments to £104 billion, with £38 billion of increases from the new administration alone.
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Wealthy planning to emigrate if Miliband becomes chancellor
Ultra-high net worth individuals look for ways to avoid possible equalisation of capital gains tax with income tax
TONY DIVER
Wealthy Britons are preparing to leave the country if Ed Miliband becomes chancellor and launches a new tax raid on the rich, The Telegraph can reveal.
Ultra-high net worth individuals based in the UK have contacted international tax advisers looking for a way to avoid the possible equalisation of capital gains tax with income tax in the first months of Andy Burnham’s government.
Mr Burnham – who has said the country has “overtaxed jobs [and] undertaxed wealth” – is widely expected to launch a review of CGT ahead of his first Budget later this year.
Although the incoming Labour leader has pledged to remain within the party’s manifesto pledges on tax, including not to raise VAT, income tax or National Insurance, he is thought to be considering a range of changes to personal taxation.
They could include the equalisation of CGT with income tax, which has become a popular policy on Labour’s soft-Left, and a new 50p top rate of income tax.
Mr Miliband is now considered the front-runner in the race to become the next chancellor, although City bosses have warned that he would be treated less favourably by the markets than a more centrist choice such as Shabana Mahmood or Wes Streeting.
The Telegraph understands that entrepreneurs are preparing “escape plans” to leave the country if Mr Miliband succeeds Rachel Reeves this month.
David Lesperance, an international tax adviser to the super-rich, said his clients had begun to make plans to remove their assets from the UK, fearing higher rates of CGT and an exit tax to capture fleeing millionaires.
“My clients are concerned that, with the proclamations from both Andy Burnham and Ed Miliband, there will be a massive increase in CGT and possibly an exit tax as well,” he said.
“These people were concerned about Labour at the last election, and they have still got their escape plan set up. Now I’m getting more people setting up escape plans.”
Mr Lesperance said that there was now a “dramatically increased chance” of higher rates on capital gains, which many wealthy Britons feared would be introduced when Labour took office in 2024.
Research by Henley & Partners last year estimated that 16,500 wealthy people had left the country under Labour, although the report’s data was skewed towards richer millionaires with more than $1m in liquid assets.
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(UKR)