Keir Starmer and Rachel Reeves are being called on by a prominent group of global economists to use the upcoming autumn budget as a launchpad for implementing a wealth tax, aimed at addressing what they describe as “extreme” inequality in the UK.
The group argues that a wealth tax could generate “tens of billions of pounds” while positioning the UK as a global leader in progressive tax policy.
Among the signatories are leading figures such as French economist Thomas Piketty, known for his work on wealth inequality, Indian development expert Jayati Ghosh, former Colombian finance minister José Antonio Ocampo, and economist Ha-Joon Chang.
In a letter shared with The Guardian, the economists warn that wealth concentration in the UK has reached alarming levels: “We cannot allow extreme wealth inequality to deepen while millions of people are consigned to struggle for a basic quality of life. A progressive wealth tax is a critical step forward, and one that we urge the UK government to take.”
The timing of the call coincides with increased fiscal pressures on the government, as Labour faces demands from senior figures and trade unions to find ways to cover a multibillion-pound hole in the public finances. The group says a “modest” tax on assets above £10 million could generate significant revenue while helping to avoid a return to austerity.
The letter also emphasises the need for long-term structural reform: “Keir Starmer and Rachel Reeves can build a tax system fit for the 21st century – that promotes fairness, first-class public services and good living standards for everyone.”
Despite growing support, Reeves is reportedly resisting internal Labour demands for a new wealth tax, though she has not publicly ruled it out. Former Labour leader Neil Kinnock is among the high-profile advocates.
However, some cabinet members, such as business secretary Jonathan Reynolds, have dismissed the idea, describing it as a “daft” policy “that would not work.”
While some countries like Spain, Norway, and Switzerland have implemented wealth taxes, others – including Germany, Austria, and Denmark – have abandoned them. Nonetheless, the economists remain confident that the UK could navigate these challenges.
“Starting at the autumn budget the pieces of the puzzle – from consultation to design – can be collected to allow the government to roll out a wealth tax within this parliament. This could improve people’s lives in years to come and avoid austerity for key services we all benefit from,” they wrote.
Tax Justice UK, the group that coordinated the letter, estimates a 1%-2% tax on wealth over £10 million could raise up to £22 billion annually, affecting only 0.04% of the population.
A Treasury spokesperson responded: “We are committed to keeping taxes for working people as low as possible, which is why at last autumn’s budget, we protected working people’s payslips and kept our promise not to raise the basic, higher or additional rates of income tax, employee national insurance or VAT.”