Inside Labour's tax raid on higher earners: Will Labour go after pensions, capital gains, and detached homes? - analysis by Millie Cooke

Millie Cooke

By Millie Cooke


Published: 14/06/2024

- 09:21

Updated: 14/06/2024

- 10:37

Labour is making significant spending pledges in its manifesto, which rely on a certain level of economic growth - but where will the money come from?

Sir Keir Starmer unveiled the Labour Party's manifesto today, pitching it as a "manifesto for wealth creation".

He said it is a "plan for change" for a "government back in the service of you and your family".


Starmer added: "Make no mistake, that is the cause of this changed Labour party. We have written that argument through every word of this manifesto.

"Too many communities are not just locked out of the wealth that we create, they are disregarded as sources of dynamism in the first place. Ignored by the top down idea that economic growth is handed down by the few to the many."

Sir Keir Starmer

Sir Keir Starmer unveiled the Labour Party's manifesto today, pitching it as a "manifesto for wealth creation"

PA

But there have been warnings from thinktanks and opposition parties that a Labour Government would see taxes rise.

Sunak - with multiple other Cabinet ministers repeating the claim after him - has argued that Labour would see taxes rise by £2,000 per household.

The Party has been rebuked by the UK’s statistics watchdog, who said it is unclear how the claim was calculated.

And Sunak's claim that the figures were produced by independent civil servants at HM Treasury was disputed by Treasury permanent secretary James Bowler.

But its not just Sunak who has said Labour's taxes will rise more than the party suggests.

The Institute for Fiscal Studies dubbed the tax rises outlined in Labour’s manifesto as "trivial" compared to the major spending promises made in their manifesto.

The major pledges include slashing NHS waiting lists, clamping down on crime and turning Britain into a clean energy superpower.

The IFS warned that - if the economy fails to grow at the expected rate - "taxes will rise" under a possible Labour government.

So what does Labour say? While they undoubtedly dismiss the Tories' 2,000 tax rise claim, the party's own costings document shows that it plans to raise around £7 billion in revenue from tax.

But where exactly does this revenue come from?

Some £5.2 billion would come from closing the non-dom loophole and cracking down on tax avoidance - a key aspect of Labour's plan for Britain.

Meanwhile, £1.5 billion will come from VAT and business rates on private schools, according to its calculations.

The rest would come from closing the carried interest tax loophole and increasing stamp duty on purchases of residential property by non-UK residents by 1 per cent, the document says.

Most of these taxes would not impact large swathes of the population, focusing mainly on higher earners. But given Labour is making such significant pledges in its manifesto, which rely on a certain level of economic growth, perhaps the party has further questions to answer over where the funding for such big commitments will come from.

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