Wes Streeting, in his bid for the Labour leadership, has proposed a wealth tax, criticizing the current tax system as unfair and detrimental to work. Streeting advocates for aligning capital gains tax rates with income tax rates, estimating a potential £12 billion annual revenue increase.

Under Streeting’s proposal, higher rate taxpayers would pay the income tax rate of 40% on gains, currently taxed at 24%. Additional rate taxpayers would be taxed at 45%, the same as their income tax rate. The plan aims to eliminate loopholes used to convert work income into capital gains, such as through personal service companies or stock-based pay.

Streeting highlighted the disparity where a cleaner pays a higher tax rate on her earnings compared to her landlord’s tax on property appreciation. He emphasized the need for a fair tax system that does not penalize labor and instead values all income sources equally.

Various organizations, including the IFS, Resolution Foundation, and Tax Policy Associates, have supported taxing gains at the same rate as income above a reasonable return on investment. Streeting’s proposal comes after his resignation speech warning Labour to change course or risk losing to Reform UK. This move fueled speculation of a potential leadership challenge.

Chancellor Rachel Reeves is set to announce a cost of living initiative, aiming to reduce grocery costs by cutting tariffs on over 100 items like tomato ketchup, marmalade, and biscuits until 2028. Additionally, fare-free travel for school children in England in August is expected to be unveiled as part of the money-saving measures.