Burnham ally warns against wealth tax hikes, citing growth concerns

Lord Jim O’Neill, a senior ally of Prime Minister Andy Burnham, has cautioned against increasing wealth taxes, warning that such measures would be 'stupid' and detrimental to economic growth. O'Neill, who recently declined a government role, argued that higher taxes like inheritance tax and capital gains tax could prompt entrepreneurs to leave the country and potentially result in lost revenue for the Treasury.

O'Neill also emphasized the need for a 'sensible, realistic approach to welfare spending' to address national debt, stating that ministers would be 'scared, lazy and constrained' if they failed to tackle this issue. He suggested that raising taxes in the upcoming budget on October 28 would indicate a lack of sincerity regarding growth.

Meanwhile, Chancellor John Healey has assured business leaders that the government will support firms struggling with rising costs and that the budget will prioritize fiscal discipline. However, business representatives, such as CBI chief executive Rain Newton-Smith, expressed apprehension, recalling that Labour had previously raised taxes on employers shortly after returning to government. The government faces challenges in funding defense spending shortfalls and addressing economic impacts from the Iran war, with fiscal headroom reportedly shrinking.