Wes Streeting Proposes Equalising Capital Gains and Income Tax to Raise £12 Billion Annually
Wes Streeting, who recently resigned as Health Secretary, has advocated for a reform to capital gains tax, proposing its equalisation with income tax. He estimates this change could raise £12 billion annually, addressing what he terms an unfair system that "penalises work".
Streeting detailed the policy following his resignation, which fuelled speculation regarding a bid for the Labour leadership. He has since confirmed his intention to seek the leadership should a contest arise, having previously informed Sir Keir Starmer directly of his challenge.
Taxation Reforms and Rationale
The proposed reforms to capital gains tax, levied on profits from asset sales, include mirroring the three income tax bands: 20%, 40%, and 45%. Under this system, an individual's capital gains tax band would be determined by their combined income and asset profits. Streeting also aims to close loopholes that permit the misrepresentation of work income as capital gains. Conversely, he suggests offering lower capital gains tax rates to "genuine" entrepreneurs to encourage investment.
A 2024 report by the Centre for the Analysis of Taxation indicated that such reforms could generate up to £14 billion, highlighting the potential fiscal impact of Streeting's proposals. The current system taxes gains above a £3,000 allowance, with higher rate taxpayers facing a 24% charge.
Leadership Ambitions and Other Policy Positions
Streeting's leadership aspirations were complicated by Greater Manchester Mayor Andy Burnham's reported decision to pursue the Makerfield by-election, preventing what Streeting saw as a deliberate attempt to pre-empt Burnham's return to Westminster. To trigger a leadership contest, Streeting would require the support of 81 Labour Members of Parliament.
Beyond taxation, Streeting addressed Brexit, labelling the 2016 referendum outcome a "catastrophic mistake" and indicating that the UK should "one day" rejoin the European Union, provided it is the "settled will of the country". He also criticised the appointment of Lord Peter Mandelson as the UK's ambassador to the US, citing Mandelson's prior conduct and relationship with Jeffrey Epstein, stating he would not have made the appointment.
