Wes Streeting calls for ‘wealth tax that works’

Labour leadership hopeful Wes Streeting has called for a ‘wealth tax that works’ by equalising tax on income and assets.

Under the current system, capital gains tax is generally much lower than income tax. Capital Gains Tax (CGT) is a tax levied on the profits made when selling or “disposing of” an asset that has increased in value.

Basic rate taxpayers pay 18% on most assets, while higher and additional rate taxpayers pay 24% on both regular assets and residential property.

Streeting is suggesting capital gains tax rates should mirror the three bands of income tax – 20%, 40%, 45%.

Because of the disparity, ordinary workers who rely entirely on an employment income often face a higher overall tax rate (including National Insurance) than the very wealthy who derive most of their income from financial investments and assets.

Streeting says he believes it’s time for capital gains and income tax to be equalised.

“The wealth gap in this country has widened, the opportunity gap in the country is widening and the gap between earned income and unearned income has also widened,” he told the BBC’s Political Thinking podcast.

He said the reforms could raise up to £12bn a year.

He used the example of a woman in Lancashire who paid a higher rate of tax on her salary than her landlord paid for the growing value of the house she rented.

“She slogs her guts out, he puts in far less effort, yet the state rewards him more than her. And we wonder why people are angry,” he said. “The system is penalising work. It’s not fair and it’s bad for our economy. We need a wealth tax that works. A pound made from simply owning assets should not be taxed less than a pound made from a hard day’s work.”