Cross-party MPs including former Labour Party leader Jeremy Corbyn and former shadow chancellor John McDonnell have written to Rachel Reeves to demand she brings in a wealth tax in the upcoming budget and halt what is seemingly austerity 2.0.
The letter, signed by 30 MPs, calls for a wealth tax of 2% on “extreme” wealth of more than £10m. It also called for an equalisation of capital gains tax with income tax.
Ridiculous inequality
Five Labour MPs sitting as independents, all the Green MPs, 12 Labour MPs, one Lib Dem,and a number from other smaller parties signed the letter. It reads:
In recent years, billionaire wealth has soared, increasing by almost £150bn between 2020 and 2022. Despite this, revenue from wealth taxes has remained stagnant at around 3.4% of the UK’s GDP, proportionately only 1% higher than rates in 1965. This stands in contrast to other trends in the tax system, meaning that the richest are relatively under-taxed.
One signatory, Zarah Sultana, pointed to Oxfam research that shows the richest 1% of the population holds more wealth than 70% of the country. A recent report from the Fairness Foundation additionally shows that the richest 10% held £11 trillion in wealth in 2019, a huge increase on the £7.5 trillion they held in 2011. Both reports demonstrate that for every minute gain in wealth for the majority of people, the richest make thousands and the very richest make millions.
Sultana, who is one of the MPs sitting as an independent after Keir Starmer suspended her for opposing the two child benefit cap, said:
Austerity is, and always has been, a political choice. It is grossly unfair that children and pensioners are being pushed into poverty while billionaire wealth continues to grow.
We urgently need wealth taxes to rebalance power, fund essential public services and build a society where the needs of the many take precedence over the greed of a few.
Labour’s choices: austerity 2.0
Reeves claimed there would be no “return to austerity” at the Labour conference in September. But she has already used a so-called £22bn ‘black hole’ in the nation’s finances as a pretext against those who have the least, cutting the winter fuel payment for low income pensioners and maintaining the Tories’ two child benefit cap.
The cap has already plunged another 10,000 children into poverty since the election. And the winter fuel payment cut removes support from 84% of pensioners in poverty and 71% of disabled pensioners.
At the same time, Reeves has not reversed any of the Tories’ austerity ongoing since 2010. Between 2010 and 2023, for example, austerity budgets for councils resulted in a 43% real terms cut on spending per person on cultural services, a 40% cut on roads and transport and a 35% cut to housing.
Or there’s education. Since the Tories came to power in 2010, propped up by the Lib Dems, 70% of state schools have faced real term cuts. It would take £12.2bn of investment to reverse the cuts.
Instead, Reeves is planning more spending reductions. She has quietly asked ministers to find billions in cuts to infrastructure projects in every government department. She has told ministers to model cuts of up to 10% of their entire annual capital budget. Under current plans, public investment is already projected to fall from 2.4% of GDP in 2024-25 to an even lower 1.7% in 2029-30.
Make no mistake: this is austerity 2.0. The MPs are right to demand a wealth tax. The way our society is run is beyond a joke.
Featured image via ElDiarioes – YouTube and The Telegraph – YouTube
