RUTH SUNDERLAND: Labour’s tax agenda is insane

Rachel Reeves’ tax grab in her October budget to plug the largely false “black hole” she claims to have discovered in the government’s finances will no doubt be presented as a measure aimed at the rich, but will hit the middle class hardest.

The wealthy among us, including non-residents and private equity partners, many of whom come from abroad, often have the opportunity to leave the UK.

The same goes for the CEOs of our major listed companies. Many of them come from abroad and can work almost anywhere they want.

Dubai, where income tax is zero, is attractive to many, including young professionals and ambitious entrepreneurs.

Financial advisers serving wealthy clients say millionaires are looking to leave the country to protect their wealth from our tax-happy socialist masters, who include a slum boss and a raging (in Ibiza) deputy prime minister. For many of us, packing our bags and heading off into gilded exile is not an option.

Keir Starmer’s statement that ‘those with the broadest shoulders should bear the heaviest burdens’ bears no resemblance to reality.

Fairly well-paid workers are already being hit hard by creeping taxes introduced by the Conservatives but which Labour apparently wants to keep in place.

Thresholds and allowances are frozen, rather than rising to keep pace with inflation. As a result, people are taxed more even though their real income has not increased, making them worse off in terms of living standards.

This ‘tax burden’ will see one in five pensioners move into the higher tax bracket in the 2027/28 tax year. Figures obtained by financial firm Quilter show that 2.7 million people over the age of 60 will fall into the 40 percent band, with almost half a million over the 45 percent threshold.

Many more people, who receive little extra in addition to their state pension, pay the basic rate and have to file a tax return.

With the loss of the winter fuel allowance this is all the more insulting. Why pensioners should be taxed to the bone and forced to keep the heating on while greedy engine drivers bask in Labour’s largesse is not explained.

Anyone who wants to advance their career or invest in the future of their family risks punishment.

Finance Minister Rachel Reeves is considering raising capital gains tax rates to the same level as income tax.

This agenda has unintended – but entirely predictable – consequences. Financial advisors report a rush among investors to sell assets ahead of a potential rise in capital gains tax rates and a rush among entrepreneurs to divest their businesses.

If the tax benefits of pension savings are reduced, people will save less for their pension. This increases the pressure on the treasury.

If you impose taxes on workers, you create a disincentive for individuals to work and for businesses – who are also concerned about the workers’ rights agenda – to hire workers.

None of this seems very smart when Labour ostensibly wants to promote a pro-growth, pro-business economy and get more of the 9 million-plus economically inactive people into work. It’s no wonder that the latest Institute of Directors survey shows that businesses’ intentions to invest and hire reflect the sharpest decline since lockdowns began.

With its bleak economic story and eagerness to raise taxes, Labour gives the impression that Britain is not a place for talented, ambitious and enterprising people.

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