Labour is exposing its economic ignorance

It must be the worst kept secret in the country. At almost every opportunity, the Prime Minister Sir Keir Starmer, and his Chancellor Rachel Reeves, keep telling us that the Budget in October will have to be ‘very painful’, that ‘taxes will have to rise’ and that the ‘broadest shoulders will have to bear the heaviest burden’. It now seems inevitable that there will be a big rise in capital gains tax. The trouble is, there is a catch. Almost everyone will have avoided it by then – and all Labour is doing is exposing its hopeless ignorance of how the economy actually works.

A rise in CGT from the current 20 per cent to 40 per cent or even 45 per cent now seems certain. Rises in income tax, corporation tax, and National Insurance have all been ruled out, so that leaves the levy on capital gains as the only real way of raising significant sums of money.