Businessman and ex-Middlesbrough Mayor Andy Preston has lashed out on GB News about suggestions that Rachel Reeves is considering a capital gains tax hike.
The Chancellor is scrambling to raise funds and will outline how she intends to do so in this month’s Budget.
Scrapping winter fuel payments for thousands of pensioners is already on the cards as Labour seek to plug a public finance black hole of over £20bn.
Speaking on GB News, Preston said Keir Starmer’s Government should not be considering hiking capital gains as it would be a “stupid” course of action.
Andy Preston said the idea is 'stupid'
GB NEWS
“It might raise a tiny bit of extra money this year, but it would very quickly raise less and less investment would become a car crash”, he warned.
“We’d receive less money coming into the country and people living here would invest less. What happens with capital gains is if you happen to earn a lot of money, you pay income tax, you save a bit, you pay tax on the interest that earns.
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Rachel Reeves PA“Then if you want to invest in a friend’s business or buy a house to rent out or whatever else you do, you pay tax again. When you sell it, you get taxed again on the profit.
“That’s what capital gains tax is. If that goes to 39 per cent, people stop doing that. They stop saving, they stop planning, they stop investing.”
A source told the Guardian that some tax decisions are being left “until very late in the day”.
But a Treasury spokesperson played down the idea that the Government is in “disarray”, saying, “these claims are inaccurate”.
Andy Preston joined Stephen Dixon and Ellie Costello on GB News
GB NEWS
In a boost for Reeves, the UK economy grew in August after a flat previous two months, according to official statistics.
The Office for National Statistics (ONS) said gross domestic product (GDP) recorded 0.2 per cent growth in August, up from no growth in June or July.
While Reeves heralded the “welcome news”, she is continuing to warn the Budget will feature “tough decisions” from the Government.
The figures also come ahead of a Government-hosted business summit in London next week, designed to attract more foreign direct investment into the UK.
ONS director of economic statistics Liz McKeown said: “All main sectors of the economy grew in August, but the broader picture is one of slowing growth in recent months, compared to the first half of the year.
“In August, accountancy, retail and many manufacturers had strong months while construction also recovered from July’s contraction.
“These were partially offset by falls in wholesaling and oil extraction.”