Chancellor faces calls for wealth tax a week before second Budget

Rachel Reeves has been urged to tax the rich as she prepares to deliver her second Budget.

The Chancellor is widely expected to raise taxes on November 26 in order to fill a multibillion-pound gap in her spending plans, but is reported to have ruled out a manifesto-busting income tax hike.

A week before the Budget, opposition politicians, think tanks and campaign groups have called on the Chancellor to focus her plans on the wealthiest instead of pursuing broad-based tax rises.

They include new Green Party leader Zack Polanski, who said Ms Reeves’ statement “must be a cost-of-living Budget to slash people’s bills and make our country affordable again”.

In a letter to the Chancellor, Mr Polanski and other leading Greens called for a wealth tax along with changes to capital gains tax to bring it in line with income tax.

They also called for wide-ranging measures to cut energy bills, control rents and abolish the two-child benefit cap.

Mr Polanski said: “Our message to Rachel Reeves is simple: cut bills, tax billionaires.”

The Greens have proposed a 1% tax on wealth above £10 million, rising to 2% on wealth of more than £1 billion, claiming this will raise £14.8 billion a year.

But experts at Tax Policy Associates have argued such a tax would be “high-risk” and could raise much less while causing significant damage to growth.

Calls for a wealth tax have also been backed by campaign groups including Greenpeace, Oxfam and Tax Justice UK, who will present the Chancellor with a petition backing the levy signed by 575,000 people on Wednesday.

Meanwhile, think tank IPPR said the Chancellor needed to “pick the right fights” at the Budget by taxing people with “unfair advantages and profits” before raising money from “working households”.

The think tank, which has been influential in Labour policy-making, said the Chancellor should reform property taxes, raising council tax on the most valuable homes, and close “loopholes” in capital gains tax that “allow income from wealth to be taxed more lightly than earnings from work”.

Ms Reeves is reported to have told a group of loyalist MPs that she plans to raise taxes on the wealthiest, including through changes to property levies.

The Chancellor suggested to MPs during a reception in Number 11 on Monday that she could increase taxes on the most valuable properties in the country, according to the i Paper.

IPPR also called for national insurance to be levied on landlords and a reform of gambling taxes, before even considering broader measures such as extending the freeze on income tax thresholds.

Carsten Jung, executive director at IPPR, said the Chancellor should “launch ‘a war on bills’ – a relentless campaign to lower the cost of living, picking fights on behalf of working people”.

He said: “This should start with energy, food and council tax. Together with repairing public services, this Budget can be living proof that the Government is on people’s side.”

Earlier in November, the Chancellor said she was “a progressive” who believed “those with the broadest shoulders should pay the most”.