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The government has “got the balance right” on tax, Rachel Reeves has insisted after a former Labour shadow chancellor said she should consider introducing a wealth tax.
The chancellor said she had already increased taxes on the wealthiest in society with higher levies “on private jets, on second homes, and increased capital gains tax”.
Speaking to reporters in Scotland, Reeves said: “In the budget last year, we got rid of the non-domicile status in our tax system, so people who make Britain their home have to pay their taxes here.
“I think we’ve got the balance right in terms of how we tax those with the broadest shoulders, but any further decisions will be ones that are made at a budget in the normal way.”
Reeves was speaking after Anneliese Dodds, who resigned as a Foreign Office minister earlier this year over aid cuts, said ministers should “look carefully” at proposals for a one-off levy on millionaire households.
In an interview with the Guardian, Dodds, who served as Keir Starmer’s shadow chancellor in opposition, pointed to the work of the economist Arun Advani. In 2020, Advani’s wealth tax commission recommended a one-off 1% levy on household wealth above £1m as a better way of raising revenue than taxing workers and consumers.
Asked about Dodds’ suggestion, Reeves said: “The No 1 priority of this government is to grow the economy … We’ve got to get the balance right on taxation because we want that investment, we want those jobs to come here.”
Government sources argued there was “not a proposition for a wealth tax on the table” and pointed to numerous examples where a wealth tax had not worked in other countries. “Clever people and all the economists are saying it doesn’t work,” one source said.
Speaking to Sky News’ Electoral Dysfunction podcast, Dodds said the Treasury should consider the evidence from the wealth tax commission, which had “looked at all of that evidence [on wealth taxes] and set out how it would be possible to deliver something like that in a UK context”.
“We’ve seen the deputy leader of the Labour party, for example, put forward suggestions. I think it’s important for all of those to be considered now,” she said.
Different ministers have expressed conflicting views on proposals for a wealth tax. Earlier on Friday, Diana Johnson, the crime and policing minister, said it was “important … that all these issues are looked at and discussed and we look at the evidence about what will work and what won’t”.
Last week, Jonathan Reynolds, the business secretary, dismissed the idea of a “magic” wealth tax as “daft” and told his colleagues to “get serious”.
Reynolds told GB News that a tax like that “doesn’t exist anywhere in the world. Switzerland has a levy, but they don’t have capital gains or inheritance tax.
“We’re not going to do anything daft like that. And I say to people: ‘Be serious about this’ … 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 to see it. I see colleagues sometimes say this in parliament and I say: ‘Come on, get serious.’”
