Labour’s tax-raising agenda can no longer be hidden

Pensioners are undertaxed “codgers” who should be giving more to the state. The VAT threshold should be dramatically reduced so anyone doing a few odd jobs at the weekend might find themselves adding 20 per cent on top to give to the Treasury. No one could accuse the former head of HMRC Sir Edward Troup of lacking loyalty to his old employer.

In his new role as an adviser to shadow chancellor Rachel Reeves, Sir Edward’s historic policy suggestions have taken on a new light – and brought on scrutiny. So why do Labour employ his advice? The truth is that as the party draws closed to taking power, its mask is slowly slipping. Never mind that taxes are approaching a 70-year high, nor that they are crushing the life out of the economy – Labour seems intent on asking for more regardless.

Sir Edward fits perfectly into their mould. Earlier this month, it was revealed that he suggested pensioners were not paying their fair share towards the state, advocating stripping them of perks such as free TV licences, or perhaps even handing these perks to younger people.

This weekend we learned that he suggested the threshold for VAT registration should be halved in a move which would hit hundreds of thousands of small businesses. Estimates show that lowering the threshold to £50,000 – a figure close to Sir Edward’s suggestion – would mean 351,000 more businesses having to register for the tax in 2025-26.

It all begs the question: what next?

Keir Starmer and Reeves are doing everything they can to reassure voters and industry that they have no plans to conduct a tax raid, that they will stick to the self-imposed “fiscal rules”, and that there will be no “uncosted” spending programmes. When the manifesto is published, we can expect it will promise no increase to the basic rate of income tax or national insurance. It might even include one or two tax cuts, designed, like any good conjurer, to distract attention from all the rises elsewhere.

Piece-by-piece, however, the real tax raising agenda is starting to emerge. Alongside Sir Edward, the Resolution Foundation – one of the Labour’s favourite think tanks – has been busily dreaming up new tax rises, such as imposing National Insurance charges on the rental income of landlords. The party’s outriders and advisers appear to have a clear mantra. If it moves, tax it. If it keeps moving, raise the tax even higher.

Many of the changes will likely be dressed up as purely “technical”. Take the suggested VAT raid, if Sir Edward’s comments are to be taken seriously. Sure, there is a textbook argument that smaller companies and sole traders should levy the tax. Some might even keep their turnover just below the £90,000 threshold to avoid it.

And yet, that ignores the fact that they might well lose customers when they have to start charging an extra 20 per cent on jobs. Others could decide a side gig isn’t worth it if they will have to deal with VAT enquiries, not a section of government exactly famous for its charm and helpfulness.

Or take the argument, seemingly advanced by Sir Edward, that pensioners should be taxed more. Sure, some of them are quite wealthy, but many are not. And unlike younger people, they have few opportunities to earn more. It is hard to describe anyone in Britain today as “undertaxed” – but pensioners are certainly not on the list.

There are other areas where the Labour’s urge for “tax fairness” could lead to higher taxes. Capital Gains Tax, perhaps? That could certainly be made “fairer”, by the Left’s definition of the word. Or even road pricing, taking billions more from motorists.

None of it will help an economy already trapped in a doom loop of stagnant growth and rising government spending.

In reality, the UK’s tax system needs deconstructing. Taxes are too high, taking too much spending power out of the economy. And marginal rates have run out of control, with many families – particularly those with student loans – having to pay an extortionate amount as a proportion of their income.

If Britain is to recover from its current mire, the economy needs both lower and simpler taxes.

Unfortunately, Labour seems committed to the opposite. As the moment when they will take power draws closer, and they become more certain of victory, that is becoming painfully clear.