Starmer refuses to rule out future income tax rises

Labour leader says ‘nothing is off the table’ as party announces review of a thousand tax reliefs

SIR KEIR STARMER yesterday declined to rule out proposing income tax rises in the future as Labour announced it would review a thousand different tax reliefs, ditching some of them.

Tax breaks for private schools and private equity managers would be ended if the Labour leader entered No10, it was announced, in a new approach on taxation.

The entire system of business rates would also be scrapped should Sir Keir make it to Downing Street, replaced by measures more focused on helping small companies.

The overhaul will be outlined by Rachel Reeves, the Labour shadow chancellor, as she delivers her speech to the party conference in Brighton today.

The drive is in part an attempt to simplify the tax system and make it fairer, with Labour sources stressing the focus will be on reducing inequality and creating jobs.

However it will trigger concerns that Sir Keir would increase the UK tax burden even higher than current levels – the highest in 70 years – if he won office at the next election.

During an interview on BBC One’s The Andrew Marr Show, Sir Keir, almost 18 months into his leadership of the party, was asked for his views on tax.

Discussing whether he would back an income tax rise, Sir Keir said: “We are looking at tax, nothing is off the table, but we don’t know what the state of the national finances will be as we go to the election.

“What we don’t want to do – whether it’s income tax, or any other sort of tax, national insurance – is unfairly to hit working families, which is what this Government is doing.”

Elsewhere Sir Keir indicated he sup- ported some form of wealth tax. He has previously said he would consider taxes on property or stocks and shares to generate money for the NHS.

Sir Keir also repeatedly declined to promise he would reverse Boris Johnson’s 1.25 percentage point increase in National Insurance announced earlier this month, which Labour has fiercely criticised.

The three positions raise the prospect of Sir Keir going into the May 2024 general election proposing to increase the overall level of tax in the UK.

Mr Johnson’s decision to break a Tory manifesto pledge not to increase National Insurance in order to pay for social care reforms and higher NHS spending pushed up the tax burden to its highest point since the post-second World War years.

Ms Reeves had earlier told The Sunday Times she does not have “any plans” to increase income tax, adding: “I do think that people who get their income through wealth should have to pay more.”

A Labour press release explaining their new tax position said there are up to a thousand different tax reliefs which are collectively worth at least £174 billion a year.

The release specified two reliefs that would be scrapped – the tax break for private schools from their charitable status and a tax break for private equity managers.

Non-domiciled tax status, which allows someone to pay less tax if they live overseas, and tax relief for investments in venture capital trusts were also singled out as areas to be looked at.

The release said VAT exemptions for food would be kept but it remained unclear which other tax reliefs which are considered fair by the Labour leadership would remain.

A Labour source played down the possibility of pensions tax relief being changed.

Ms Reeves will say: “There are hundreds of different tax breaks in the system.

“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 then we will scrap it.

“Labour will tax fairly, spend wisely, and get our economy firing on all cylinders.”