Reeves will have to turn to wealth taxes to plug the £30 billion black hole

Rachel Reeves knows that if she were to march into 11 Downing Street on July 5, it would be a big mistake to immediately hit voters with huge tax increases.

The tax changes Labor has outlined so far would add just £3.6 billion in revenue in the next financial year, leaving a huge deficit with no indication of how it could be filled.

Despite protests that there would be no taxes on wealth and welfare, that is what Reeves is proposing.

The proposal to impose VAT on public school fees and end their charitable status, and closing loopholes for the non-domiciled wealthy, are wealth taxes.

Even the promise to target tax avoiders with the aim of eventually raising £5 billion will hit the wealthy with access to sophisticated advice.

The burden may ultimately fall on the shoulders of the self-employed and smaller businesses.

We now know from the International Monetary Fund’s annual inspection of the UK economy that there is potentially a gap of up to £30 billion in the public finances that needs to be filled.

The Tories calculate that if Labour’s spending promises are met, the party will need to raise a further £38.5 billion in the forecast period to 2028-2029.

This is despite the Shadow Chancellor’s claim that Labor ‘will not put forward anything that is not fully budgeted and funded’.

Her favorite method of raising revenues is promising to close “loopholes,” a method endorsed last month by IMF budget chief Vitor Gaspar.

Big money: Tories calculate that if Labour’s spending promises are met, party will need to raise another £38.5bn

The proposal offers endless possibilities, but closing loopholes could have disastrous consequences.

Labour’s plan to remove tax breaks for oil exploration in the North Sea would simply kill new investment and drive big oil to friendlier waters, such as deepwater drilling in the Gulf of Mexico.

Here are five ways Labor could make Britain poorer by closing so-called loopholes, which is basically a polite name for tax increases:

VAT: This is the largest pot of gold identified by the Institute for Fiscal Studies, which calculates that reduced rates and reliefs will cost the Treasury £100 billion. Many goods and services are exempt from the 20 percent rate or pay a lower 5 percent.

Pensions: Labor has a history of punishing private pension savings. Money spinners could include re-imposing the lifetime limit on retirement savings. Or, just as controversial, reducing the tax breaks paid to the highest taxpayers.

Carried interest: This is a fancy name for the huge profits partners make when a company is sold. It is taxed as capital gains, at 20 to 24 percent for higher-rate taxpayers, escaping the 45 percent income tax. But scrapping it could drive some dealmakers elsewhere.

Housing: Sales of primary residences are exempt from capital gains tax, leading to large tax-free windfalls and a gap between generations for some owners. But taxing primary residences would be political suicide.

Bank tax: Windfall taxes on lenders are an easy target if their profits have only increased due to rising interest rates.

Past experience with Labor suggests a preference for stealth taxes, which are little understood, rather than changes to income tax and VAT.

And Reeves has already pledged not to reverse Jeremy Hunt’s 4 percentage point cut in national insurance contributions. But there are no shortage of other ways she can put pressure on us all.