Top Burnham ally calls for increase in Capital Gains Tax and relaxation of fiscal rules
A leading ally of Andy Burnham has called for Capital Gains Tax (CGT) to be increased and the government’s fiscal rules to be relaxed to allow more borrowing.
Louise Haigh, who is tipped to take on a senior role in Mr Burnham’s cabinet, has outlined her ideas as the former Manchester mayor prepares to set out his economic agenda next week.
The former transport secretary called for a series of reforms to what he described as Britain’s ‘imperial’ Treasury in an article on Saturday.
Ms Haigh, who supports a “fundamental redesign” of the tax system, said in an article published in Renewal magazine on Saturday that CGT, a tax on profits from the sale of an asset that has increased in value, “should be brought closer to income tax rates”.
The proposal means CGT could be taxed at a rate of 45 per cent, rather than the current rate of 18 to 24 per cent.
“This reform is central to restoring confidence that the system does not favor those who can structure their income over those who work to earn their income,” Ms Haigh wrote.
“It would shift the burden of taxation away from punitive business and towards unproductive capital accumulation that contributes little to the growth of the day-to-day economy.”
He also calls on the government to address issues of “intergenerational fairness” in the tax system, which is “characterized by a large number of exemptions and deductions.”
“Reforms should at least address certain loopholes, such as increasing Capital Gains Tax at death, which allows unrealized gains to escape tax entirely,” he said.
In another article in the same magazine, Ms Haigh suggests easing the government’s fiscal rules to allow some public financial institutions, such as the Sovereign Wealth Fund, to borrow more.
“We should allow the newly established National Wealth Fund to borrow on its existing balance sheet outside of fiscal rules,” he wrote.
“This will separate long-term investments in areas such as renewable energy from day-to-day government spending and alleviate fiscal pressures experienced by the Ministry of Finance.”
He also suggested removing the “authority for growth” from the “imperial” Treasury, writing: “There is a reason why no other country in the world has such an imperial financial department as ours.
“On the other hand, despite increasingly presidential politics, we have a powerless Downing Street where the Prime Minister needs the approval of the Chancellor to advance the priorities for which they were elected.”
With Sir Keir Starmer placing Mr Burnham in 10th place, Ms Haigh is expected to take up a senior role within his team after playing a key role in the election success at Makerfield as campaign manager.
Rachel Reeves appears to have accepted that she will no longer remain Chancellor; Several senior ministers are reportedly in the running to replace him, including home secretary Shabana Mahmood and energy minister Ed Miliband.
An unlikely alliance of some unionists and city traders has reportedly urged Mr Burnham against appointing Mr Miliband as chancellor because they believe his net zero policies are counter-productive.
But on Sunday, Labor deputy leader Lucy Powell said she supported Mr Miliband as a good chancellor.
Asked whether he would be good at running the Treasury, he told the BBC’s Sunday With Laura Kuenssberg programme: “Yes, I think so actually, but actually I think it’s a bit of a distracting conversation because I think it’s a very important job that we all have to do.”
He added that the cost of living should be the focus, not “blathering” about cabinet positions.
