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The Shadow Chancellor, Rachel Reeves, has given the Financial Times more insight into Labour's tax policy.
With the main manifestos now published, we have reached the stage in the election campaign where each of the parties in contention for the top slot challenges the other on what was – or was not – in their manifestos.
Last week, as part of the manifesto battle, Rachel Reeves was featured in a Financial Times article, based on an interview held at the FT’s London HQ. The tax takeaways from this were:
She repeated a statement from a previous interview that they “…we’re not going to have an Financial Transaction tax.” By that she meant that there was no hidden agenda to raise capital gains tax or inheritance tax, neither were there plans to reduce pension tax relief. Subsequently the FT reported that Reeves’ attack on carried interest would have a carve out for entrepreneurs investing substantial amounts of their own money in a business.
She said, “…I don’t believe that fiddling around with tax rates is the best way to grow the economy”, which ties in with the curious lines in the manifesto about not increasing the basic, higher or additional rates of tax.
She repeated her pledge to give the OBR (Office for Budget Responsibility) its standard ten weeks’ notice to undertake pre-Budget number crunching. That takes us to mid-September but, as the FT noted, the ten weeks wait also takes us close to Party Conference season, when parliament goes into recess. Labour’s conference starts on 22 September, suggesting that it might not be before October that a Budget arrives.
At that point Reeves might decide that she may as well wait for the Spending Review to be completed, which she said needs to be done “pretty quickly”. She did not comment on whether she was considering a one-year interim review, which is looking increasingly likely, or the full fat three-year version.
Reeves, a former Bank of England economist, rejected the Reform idea that the Bank should stop paying interest on commercial banks’ reserves, which she classed as a tax on banks.
A reform of council tax bands was also not on Reeves’ agenda. Her argument there was an interesting one – there were better places to expend her “political energy’.
Perhaps surprisingly, Reeves said the time-honoured tradition of opening the books and discovering the true public finance horrors was no longer credible, given the work of the OBR.
Source: TechlinkProfessional
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