Business Secretary Jonathan Reynolds has dismissed the idea of a "magic wealth tax" as "daft" amid growing speculation that Chancellor Rachel Reeves could introduce such measures to address mounting fiscal pressures. His comments come as the Government faces a multibillion-pound funding gap following recent policy U-turns.
The Chancellor is under increasing pressure to find new revenue sources after reversing course on welfare reforms and winter fuel payment cuts. These policy changes have created significant holes in the public finances, prompting speculation about potential wealth taxes targeting the assets of Britain's richest citizens.
Reeves faces mounting pressure
Rachel Reeves has not ruled out introducing a wealth tax but remains committed to her pledge not to raise taxes on "working people". The Chancellor's options appear increasingly limited as she prepares for the next budget whilst trying to maintain Labour's election promises.
Several prominent Labour figures have publicly backed the idea of a wealth tax. Former party leader Lord Neil Kinnock and Wales's First Minister Baroness Eluned Morgan are among those calling for such measures to help fund public services.
Reynolds rejects wealth tax calls
However, Reynolds firmly rejected these proposals during an interview with GB News. "This Labour Government has increased taxes on wealth as opposed to income - the taxes on private jets, private schools, changes through inheritance tax, capital gains tax," he said.
The Business Secretary argued that no effective wealth tax model exists globally. "The idea there's a magic wealth tax, some sort of levy… that doesn't exist anywhere in the world," Reynolds explained.
Practical challenges highlighted
Reynolds pointed to Switzerland as an example, noting that whilst the country has a wealth levy, "they don't have capital gains or inheritance tax". He emphasised the practical difficulties of implementing such a system in the UK.
"What if your wealth was not in your bank account, (what if it was) in fine wine or art? How would we tax that? This is why this doesn't exist," Reynolds said. He urged critics to "be serious" about the complexities involved in taxing non-liquid assets.
The Government has already implemented several measures targeting wealth rather than income, including new taxes on private jets and private schools, alongside changes to inheritance and capital gains tax rates.
(PA/London) Note: This article has been edited with the help of Artificial Intelligence.
