Sir Keir Starmer has refused to rule out a wealth tax or say if he would extend a freeze on income tax and national insurance thresholds.
Asked twice during Prime Minister’s Questions if he could rule out a tax on the wealthiest, Sir Keir sidestepped the questions.
Conservative leader Kemi Badenoch said he was “flirting with Neil Kinnock’s demand for a wealth tax” after the former Labour leader called for one on Sky News’ Sunday Morning With Trevor Phillips.
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Sir Keir dodged the question by saying his government has stabilised the economy, but was asked again by Green Party co-leader Adrian Ramsay if he would stand by his promise that “those with the broadest shoulders should carry the largest burden”.
The PM simply said: “We can’t just tax our way to growth.”
Earlier this week, ministers and Sir Keir’s spokesman also refused to rule out a wealth tax.
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PM dodges threshold freeze question
The prime minister also avoided Ms Badenoch’s questions about whether he would lift a freeze on income tax and national insurance thresholds.
In her first budget last autumn, Chancellor Rachel Reeves said Labour would keep the thresholds frozen until 2028-29 = to when the Conservatives had frozen them to.
But she said, after that, they would be uprated in line with inflation.
Asked if that still stands, Sir Keir said Labour would “stick to our manifesto commitments”.
However, freezing thresholds was not in the party’s manifesto.
Freezing thresholds leads to fiscal drag, where more people pay higher levels of income tax because they are dragged into higher tax thresholds as their pay increases.
Ms Reeves previously said, at the budget: “Extending the threshold freeze would hurt working people.”
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PM will not raise income tax
Sir Keir did confirm he would not raise income tax, national insurance or VAT.
When asked by Ms Badenoch if he stood by his manifesto promise to not increase them, he said: “Yes.”
He also said the party is “absolutely fixed on our fiscal rules”.
This will make it difficult to raise more cash for public services – something the government desperately needs after a series of blistering U-turns that have resulted in savings being wiped out.
The welfare bill went through last week but was so heavily watered down after dozens of Labour MPs threatened to rebel, it will no longer save the projected £5.5bn a year by 2030.
At the beginning of June, Labour also largely reversed its cuts to winter fuel payments. It means instead of saving £1.4bn in 2024-25, rising to £1.5bn this year – the savings will only amount to £500m a year.
