Rather than cutting spending, they want her to drive UK taxes higher still and have revived a very bad idea that they think will solve all of the UK’s problems.
And now pressure is building to introduce it.
The economy is in a mess. Reeves has brought the UK to a standstill through her disastrous strategy of talking down the economy and hitting us with £40billion of tax hikes in the Autumn Budget.
That destroyed growth as anxious businesses stopped investing and panicked consumers stopped spending.
Last week, the Office for Budget Responsibility halved its 2024 growth forecast from 2% to just 1%. The Bank of England is even gloomier at 0.7%.
The UK tax burden is now forecast to hit a new record high of 37.5% of GDP this Parliament, further destroying growth.
But Labour activists take a different view. They think we aren’t paying enough.
Campaigners are pushing Reeves to introduce a brand-new levy that they claim will raise tens of billions. They want Reeves to introduce a UK wealth tax.
The idea is gaining traction among activists, led by the left’s latest golden boy, ex-City trader turned equality campaigner Gary Stevenson.
A host of campaign groups, including Oxfam, Patriotic Millionaires UK and Tax Justice UK are also pushing for it.
They claim a 2% wealth tax on those with net assets over £10million could raise £24billion a year, while affecting just 20,000 people.
And the public is in favour. Three-quarters of Britons would prefer taxing the very richest over cutting public spending, according to Oxfam research.
The appeal is obvious. More than 99% of the population aren’t millionaires (me included) so this tax wouldn’t touch us.
It sounds like a golden ticket, solving all of our fiscal problems in one fell swoop. Except it won’t.
Labour Chancellor Denis Healey shot the wealth tax down way back in 1976, despite promising to introduce it. He said: “In five years I found it impossible to draft one which would yield enough revenue to be worth the administrative cost and political hassle.”
A wealth tax would a logistical nightmare, requiring annual valuations of all assets. It would also lead to mass tax avoidance and capital flight.
As I reported yesterday, rather the raising money, hiking capital gains tax will actually cost us £23billion as those targeted change their behaviour.
A full-scale wealth tax would almost certainly cost more than it raises, as the rich find ways to dodge it or flee the UK for less punitive climes.
Amid all the fuss, confidence and growth would be shattered, the economy would shrink at an even faster rate, and tax revenues would most likely fall.
At which point the left would most likely double down on the wealth tax, so that more people paid.
And thanks to fiscal drag, their numbers would increase every year.
Wealth taxes aren’t just for the super-rich. Norway is one of the few countries to introduce a wealth tax and stick with it. That kicks in at £150,000, not £10million. The same would inexorably happen here, if it was ever sneaked in.
Even Reeves isn’t daft enough to introduce one, is she? Let’s see how desperate she gets.
