Can a Labour Party Wealth Tax Fill Britain’s Fiscal Hole?

Having ruled out raising any of the most lucrative taxes (income tax, VAT and national insurance), Britain’s Labour Party has left itself with few options with which to fill existing fiscal gaps, let alone to finance its own spending ambitions. In the absence of clear guidance on the matter, the Institute for Fiscal Studies has accused both major parties of a “conspiracy of silence” regarding their funding intentions.

Yet this silence itself speaks volumes. If you take Labour’s pledge not to increase the taxes of working people at face value, that quickly leads to some form of capital taxation or wealth tax. Labour’s Shadow Chancellor of the Exchequer Rachel Reeves said last year that the party has “no plans for a wealth tax”. However, she hasn’t repeated the denial, even as the pledge not to increase "taxes on working people” has become an important cornerstone of the party’s manifesto.