Tony Blair's Think Tank Warns Andy Burnham: Don't Raise Capital Gains Tax

A think tank connected to former British Prime Minister Sir Tony Blair is warning Andy Burnham not to raise a tax called capital gains tax. Burnham is a Member of Parliament who many people expect will become the next Labour Party leader and Prime Minister. The think tank says raising this tax would be bad for business and would push talented entrepreneurs away from the UK.

Capital gains tax is a tax on the profit someone makes when they sell something valuable, like a second home or shares in a company. Right now, people in the UK can make up to £3,000 in profit before they have to pay the tax. After that, they pay between 18 and 24 percent on their gains.

Some politicians, including some close to Burnham, want to raise capital gains tax so it matches income tax rates. Income tax in the UK is charged at 20 percent, 40 percent, or 45 percent, depending on how much someone earns. Experts say making capital gains tax match income tax could bring in about £12 billion more each year for the government.

However, the Tony Blair Institute for Global Change disagrees with this idea. A senior analyst there named Guy Ward-Jackson wrote that giving the UK the highest top capital gains tax rate in Europe — at 45 percent — would be a mistake. He argued it would hurt entrepreneurs at a time when other countries are trying hard to attract them.

Ward-Jackson wrote that Britain needs people who are willing to take risks, start new businesses, and try new ideas. He said that capital gains tax relief is one of the few tools that encourages people to take those risks. Without it, he warned, the UK would fall behind countries like the United States.

Burnham has said he is open to some tax changes. He has promised to keep Labour's 2024 election pledges not to raise income tax, national insurance, or VAT. But he told a radio station called LBC that there is room to raise taxes in other areas, like taxes on warehouses, which could help businesses on the high street such as pubs.

Two politicians who support Burnham have spoken in favor of raising capital gains tax. Wes Streeting, a former health secretary, has called for it to be brought in line with income tax but with protections for real entrepreneurs. Louise Haigh, another Burnham supporter, has also said capital gains tax should be moved closer to income tax rates, and Burnham's team has not yet made an official statement on the matter.