Andy Burnham, the Labour leadership front-runner, is weighing two radical tax proposals to slash energy bills: equalising capital gains tax with income tax and slapping a windfall tax on London banks. The first, championed by think tank Mainstream and policy lead Miatta Fahnbulleh, would raise an estimated £14bn a year by taxing capital gains at 40% – the same as the higher rate of income tax. That cash would fund the removal of all green levies from energy bills, a move the Electricity Bills Taskforce says would save the average household £120 a year and cut firms' energy costs by more than a fifth. Supporters argue it would also be anti-inflationary, trimming inflation by 0.3 percentage points.
The second proposal, urged by a union ally of Burnham, would hit London banks with a windfall tax of up to £60bn to ease bills for the less well off. Burnham is expected to outline his economic vision in a speech next week. But shadow chancellor Sir Mel Stride warned: “Labour need to realise that you can’t tax your way to prosperity.” Greg Smith, the Tory MP for Mid-Buckinghamshire, branded the capital gains plan “economic lunacy”, adding: “If Labour want to see anyone with any wealth flee the country and end up with no revenue at all, that would be the way to go about it.”
“Andy Burnham considers capital gains tax equalisation and a £60bn bank windfall tax to cut energy bills.”