Labour frontbencher refuses to rule out tax increases

Jonathan Ashworth, the shadow paymaster general, repeatedly refused to rule out his party raising capital gains tax as he attacked the Tories over their “unfunded” policies.

The Labour frontbencher also failed to commit to no further rises in corporation tax under Sir Keir Starmer as he was grilled over the party’s spending plans.

At an emergency press conference he hit back at recent Conservative attacks by branding Rishi Sunak’s election manifesto “the most expensive panic attack in history”.

He unveiled a dossier which he said showed the Tories have made billions of pounds in unfunded pledges, including the reintroduction of national service.

Mr Ashworth was repeatedly grilled over reports that Rachel Reeves, the shadow chancellor, is under growing internal pressure to launch a capital gains tax raid if Labour wins the vote on July 4.

Shadow cabinet members are said to be pushing her to hike the rate of the levy, which is paid on sales of assets including property and shares, to raise billions.

Mr Ashworth was asked three times whether he could rule out such an increase but would only promise Labour will not raise income tax, national insurance or VAT.

He said: “We’ve made our commitment clear on income tax, national insurance and VAT. Nothing in our plans requires additional tax to be raised.

“We’ll be straight with the British public. Every commitment we put forward will be fully funded and fully costed, you’ll know where the money is coming from.”

His remarks came after Sir Keir also refused to rule out a capital gains tax raid, with speculation he could equalise the rate with that of income tax.

“I’m not going to write five years’ worth of budgets three and a half, four weeks before an election,” the Labour leader told The Guardian.

“But I am going to say we’re fully costed, fully funded, and that none of our plans require tax rises over and above the ones we’ve already set.”

Ms Reeves insisted last year that she did not want to put up capital gains tax because of the impact it would have on many small business owners.

Capital gains is charged at a base rate of 20 per cent on assets excluding property and hedge fund profits, which is half the 40 per cent higher rate of income tax.

Angela Rayner, Labour’s deputy leader, is among those who have previously criticised the tax being set at a lower rate, arguing it is unfair on salaried workers.

Mr Ashworth also declined to rule out hiking corporation tax if Labour wins, despite Ms Reeves previously promising it would not be put up for at least five years.

He evaded a question about whether Labour would pay for its plans by boosting borrowing, although that would breach the shadow chancellor’s fiscal rules.

The party has previously pledged that it will not borrow to cover day-to-day spending and will only do so for investment, such as to fund its green energy plan.

Asked whether he could rule out extra borrowing to pay for Labour’s policies, Mr Ashworth replied: “We will always put sound public finances first.”

Pressed further on the possibility of spending cuts to balance the books, he insisted that “the days of austerity are not returning under a Labour government”.

But he added: “We are under no illusions about the wreckage of the public finances that we will inherit.”

There has been speculation that Labour may announce tax rises once in office, arguing the public finances are in a worse state than it had realised pre-election.

Jeremy Hunt, the Chancellor, said the remarks showed Labour is planning further tax rises.

He added: “It’s becoming clearer that Labour are planning tax rises later this year on people’s homes and pensions that they are keeping out of their manifesto.

“Keir Starmer should have the courage and conviction to tell the British people what these tax rises are.”

Mr Ashworth’s impromptu press conference was seen as an attempt to wrest back the initiative after the Tories claimed Labour is planning tax rises of £2,000 per household.

Labour’s dossier said that the £12 billion of savings the Tories say they will slash from the benefits bill does not exist – with much having already been spent.

It also claimed that a £6 billion crackdown on tax avoidance, earmarked to pay for the national service scheme and the “triple lock plus” on pensions, has been overstated.

Mr Ashworth said that while his party has a similar plan, it has acknowledged that launching such a crackdown will require just shy of £1 billion in upfront investment.

He said the Tory manifesto, to be published on Tuesday, would be “a desperate wish list” and that Mr Sunak “has not even bothered to try and make his sums add up”.

“They tried to mislead the British people once in this campaign about the costing of Labour’s policies, and now they are doing the same about their own,” he added.