Chancellor John Healey has firmly rejected calls to increase capital gains tax in the upcoming Budget statement. He cited significant concerns that such a move could hinder national economic growth.
Several prominent Labour voices had previously advocated for a rise in this tax. The levy applies to profits earned from selling assets like property or shares.
For instance, Cabinet ministers Wes Streeting and Louise Haigh had both discussed raising capital gains tax during the summer. This was prior to Andy Burnham becoming Prime Minister.
However, Mr Healey has now dismissed the proposal. Warnings suggest it could ultimately cost the Government money if wealthy individuals opt to leave the country or postpone selling their assets.
Lord O’Neill of Gately, a key advisor to Mr Burnham who worked on the Northern Powerhouse project, underscored these concerns. He stated that raising “capital gains tax would send very much the wrong message to business.”
Instead, the most significant revenue-raising measure planned for the Budget involves an increase in the rate banks pay on their profits. This change was widely reported across media outlets last week.
This increased bank tax is expected to provide essential funding. It will support households and businesses grappling with the ongoing cost-of-living crisis.
The Chancellor has acknowledged Britain’s “tough” economic position ahead of the Budget. He is reportedly downplaying the prospect of major new revenue-raising initiatives in his statement on October 28.
Meanwhile, Conservative leader Kemi Badenoch is set to challenge the Government. She plans to urge Mr Burnham and his Chancellor to significantly cut spending and reduce national borrowing in the Budget.
In an upcoming speech on Tuesday, she will press the government to “live within our means.” Badenoch will highlight the Tories’ £70 billion package of spending cuts as a starting point. These proposed cuts target areas such as welfare and the civil service headcount.
Pre-Budget polling by Ipsos reveals mixed public opinion regarding the Chancellor. A large majority, 67%, believe he is doing neither a good nor a bad job. Furthermore, the survey of 1,077 Britons, conducted between October 9 and 12, found that 65% of the public anticipates some form of tax increase in the Budget.
