Rachel Reeves dropped more heavy hints about a ‘mansion tax’ as she urged Labour MPs to celebrate the Budget hammering the wealthy.
The Chancellor talked up a war on the ‘rich’ as she wooed restive backbenchers ahead of the crucial fiscal statement next week.
Ms Reeves is gearing up for another brutal round of tax hikes as she scrambles to fill a hole in the public finances estimated at up to £40billion.
She is believed to be looking at a ‘Smorgasbord’ of smaller increases after performing a shambolic U-turn on plans to increase income tax last week.
As well as the ‘wealthy’, pensioners and savers are thought to be in the crosshairs – sparking fears that a stark slowdown in the economy will be made even worse.
Keir Starmer refused to rule out extending the freeze on tax thresholds at PMQs this afternoon, which would cost ordinary workers hundreds of pounds a year.
However, despite the looming raid Ms Reeves is expected to spend £3billion a year scrapping the two-child benefit cap to appease her party.
The challenge facing the government was highlighted today as a YouGov poll found no Britons think the economy is in a ‘very good’ state – with 79 per cent convinced it is ‘bad’ or ‘very bad’. Just 14 per cent say Labour is handling it well, and 77 per cent badly.
The Chancellor is said to have gathered loyalist MPs in 11 Downing Street on Monday evening for a reception where they enjoyed ‘warm white wine, cheese twists and flapjacks’.
According to the i Paper, Ms Reeves effectively confirmed that the most expensive properties will face higher levies.
It is not clear how the increase would be imposed, although one option thought to be on the table is doubling the top rates of council tax.
That would affect more than a million families. It would mean an eye-watering rise from £3,800 to £7,600 for residents of a band G household in England – and from £4,560 a year to £9,120 for those in band H.
Other possibilities include adding extra council tax bands or imposing a percentage levy on homes over a certain value, although that would require new valuations to be done.
However, any such measures would hammer London and the South East, where property prices are higher. Critics warned it would spark a crisis for pensioners on fixed incomes and families who have stretched themselves to afford a dream home.
One MP who attended the reception told the i Paper of Ms Reeves: ‘She said she wanted us to talk loudly about charts that will show the distribution of where the new tax rises will fall, with them landing largely on the wealthiest households.’
Sir Keir was challenged by a Labour MP at PMQs to pursue ‘social justice’ by soaking the rich.
He responded that the Budget would be based on ‘Labour values’.
Ms Reeves looks set to keep the long-running freeze on thresholds in place for another two years, despite humiliatingly dropping plans to increase income tax.
The policy would net the Treasury more than £8billion a year towards filling a gap in the finances believe to be between £30billion and £40billion.
But the boost to the government’s coffers would come at a huge cost for Britons, with more than 10million people facing paying the top rate of tax by the end of the decade.
The worse-off will also be hammered, with a full-time worker earning the minimum wage seeing their annual tax bill rise £137 relative to the current policy of increasing thresholds in line with inflation.
For the first time, all pensioners will be hit with tax on the full state pension in 2027-28 – so the state is effectively giving with one hand and taking with the other.
The grim Budget backdrop for Ms Reeves was underlined today with food prices on the rise again.
The Chancellor welcomed figures showing the headline CPI inflation easing to 3.6 per cent last month, from a 20-month high of 3.8 per cent in September.
However, that was marginally worse than the 3.5 per cent many analysts had pencilled in. And the dip was largely down to a massive energy costs hike last year falling out of the numbers.
Alarmingly, the annual rate of increases in food prices rose sharply, from 4.5 per cent to 4.9 per cent – heaping more pain on struggling families.
Inflation remains far above the Bank of England’s 2 per cent target, with the spectre of ‘Stagflation’ lurking.
The economy has already effectively ground to a halt, with GDP expanding just 0.1 per cent in the third quarter and going into reverse in September.
Reacting to the inflation figures this morning, Ms Reeves was asked whether the Government’s mixed messages on tax were hitting the economy.
She told broadcasters: ‘Leaks are not acceptable.
‘But people only have to wait a week now until I deliver my Budget on Wednesday November 26.
‘The priorities of that Budget will be to tackle the cost of living, to get NHS waiting lists down and to reduce national debt. Those are the priorities of the British people, and they’ll be my priorities as I go into the Budget next week.’
The sense of panic in Labour has been mounting amid doubts over Sir Keir’s future and the rising threat from the Greens and Reform.
New Green Party leader Zack Polanski has echoed many Left-wing Labour MPs in demanding a wealth tax along with higher capital gains tax.
Some have talked up a 1 per cent tax on wealth above £10million, rising to 2 per cent on wealth of more than £1billion, claiming this will raise £14.8billion 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.
Ms Reeves previously played down the idea, although recently she has been less full-hearted in her dismissals.
