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Sir Keir Starmer opened the door to an income tax raid.
It came as Labour prepared to launch a sweeping review of tax reliefs that could hit pensions, private schools and even the cost of children’s shoes.
The Labour leader overruled his Shadow Chancellor Rachel Reeves to insist that increases in income tax would be kept ‘on the table’.
His comments will fuel speculation that he hopes to revive the 50p top tax rate imposed by the last Labour government.
Labour leader Sir Keir Starmer has overruled his Shadow Chancellor Rachel Reeves to insist that increases in income tax would be kept ‘on the table’
Miss Reeves confirmed on Sunday she is looking to increase capital gains tax to target ‘people who get their incomes through stocks and shares and buy-to-let properties’. On Monday she will unveil plans for a review of tax breaks, arguing that, with more than 1,000 reliefs in place, the system is ripe for reform.
The move could end tax breaks worth £174billion a year.
Veteran Tory MP Sir John Redwood said Labour appeared to be heading ‘straight back into tax bombshell territory’. He added: ‘Labour’s plans would be disastrous. They are reaching for higher taxes, as they always do.’
Sources close to Miss Reeves confirmed last night that she wants to use the review to end the tax breaks private schools enjoy because of their charitable status.
But the exercise will go far wider. Pension tax relief as well as the inheritance and married tax allowances could all be targeted. Even the VAT exemption on children’s shoes will be reviewed.
Rachel Reeves (centre) confirmed on Sunday she is looking to increase capital gains tax to target ‘people who get their incomes through stocks and shares and buy-to-let properties’. (Pictured on Sunday alongside Hove MP Peter Kyle (left) and Labour leader Sir Keir Starmer (right) during a visit to businesses in Hove on the second day of the party’s annual conference in Brighton
Labour sources said the only tax break certain to remain is the VAT exemption on food.
Miss Reeves said: ‘There are hundreds of different tax breaks. Some are important but too many simply provide loopholes for those who can afford the best advice. For businesses they create extra layers of complexity to navigate and added together they cost more than our entire NHS budget.
‘We will look at every single tax break. If it doesn’t deliver for the taxpayer or for the economy, we will scrap it.’
Labour sources said the review would specifically target tax reliefs that the party believes are no longer justified. These will include the £1.7billion-a-year tax break received by private schools.
The sector has warned it could face collapse if the tax break is removed, forcing more than 600,000 children into the state sector.
Veteran Tory MP Sir John Redwood said Labour appeared to be heading ‘straight back into tax bombshell territory’
But Sir Keir defended the move, telling the Sunday Mirror: ‘Labour wants every parent to be able to send their child to a great state school but improving them to benefit everyone costs money. That’s why we can’t justify continued charitable status for private schools.’
In her speech to the conference on Monday, Miss Reeves will also set out plans for a new ‘Office of Value for Money’ to scrutinise government spending decisions before funding is issued.
She had tried to rule out a Labour income tax rise, telling The Sunday Times: ‘I don’t have any plans to increase the rates of income tax.’ But she was immediately overruled by Sir Keir, who told the BBC’s Andrew Marr show: ‘We are looking at tax – nothing is off the table.’
Business rates vow
Labour will today pledge to scrap business rates and ask tech giants to pay more.
In a speech to the party’s conference, Shadow Chancellor Rachel Reeves will commit the party to replacing the hated tax.
In a first step, it will hit tech corporations by raising the digital services tax from two per cent to 12 per cent and use the £2.1 billion raised to subsidise the rates bills of high-street traders.
Mike Cherry, chairman of the Federation of Small Businesses, said the intervention was a ‘welcome call to action that would take more small businesses out of the regressive rates system’.