Chancellor of the Exchequer John Healey has dismissed calls from some Labour MPs to increase Capital Gains Tax (CGT) when he hands down his first Budget.
Cabinet ministers Wes Streeting and Louise Haigh both previously voiced support for raising CGT before Andy Burnham became prime minister in July.
Ahead of next week’s Budget, Healey ruled out lifting CGT – which is imposed on the profit people make when they sell an asset that has increased in value, such as shares in a company or properties which are not primary residences.
The move followed warnings that it could end up costing the government money if wealthy people leave the country or defer selling off assets, the Times newspaper reported.
The chancellor has previously indicated he wanted the UK to be a country of wealth creation, saying government policies should lift confidence, investment and profit.
Burnham has faced warnings against lifting CGT. His former adviser and Goldman Sachs Chief Economist Lord Jim O’Neill suggested it would send “the wrong message to business”.
But, influential Labour figures had pushed for equalising CGT and income tax, with the former generally attracting a lower tax rate.
Louise Haigh, a key ally of the prime minister, had suggested capital gains should go up to be closer to income tax, before she became Burnham’s first secretary of state.
Defence secretary Wes Streeting called for a “wealth tax that works” in May, shortly after resigning as a minister in former Prime Minister Sir Keir Starmer’s government.
Healey already ruled out levelling the two tax rates, according to the Financial Times, external.
In a pre-Budget speech on Tuesday, Tory leader Kemi Badenoch is expected to urge the government to drop its spending plans and reduce its borrowing.
