Starmer’s new budget adviser backed wealth taxes on inheritance, land, and property

Sir Keir Starmer’s new budget adviser has previously advocated for more wealth taxes on inheritance, land, and property.

The Prime Minister has brought in Minouche Shafik, a former deputy governor of the Bank of England, to take on a critical role in No 10.

Her appointment will stoke concerns that Rachel Reeves will announce severe tax increases on people’s assets in the autumn Budget.

Baroness Shafik, who serves as a crossbench peer, has previously rejected the idea of a connection between hard work and success as “pernicious.”

She also co-chaired an inquiry initiated by Torsten Bell, a Labour minister collaborating on the next Budget, which recommended a series of tax hikes.

Sir Keir has appointed Lady Shafik as his chief economic adviser after concerns arose that No 10 has been neglecting economic matters under his leadership.

She will hold significant power within Downing Street and have a major influence over the autumn Budget’s contents.

In an article published in December 2018, titled “a new social contract,” Lady Shafik advocated for wealth taxes to address intergenerational unfairness.

She wrote: “Tax systems have become less progressive as advanced economies reduced corporate taxes and top rates on personal income in the 1980s and 1990s and increased value-added taxes.

This is especially problematic given widening inequality in market incomes. And because wealth has grown even more unequal than income, we should explore taxing wealth such as inheritance, land, and real estate.”

During a speech in May 2023, she also suggested redistributive taxes on wealthier pensioners and those with more valuable properties.

She was reported as saying: “Those with comfortable pension pots must be expected to contribute more towards the common good.”

She also proposed “the imposition of property taxes which would direct a flow of capital from those in high-value properties to those unable to get on the property ladder, through a capital endowment scheme,” according to a report by Panmure House, which hosted the speech.

Lady Shafik was one of two chairs of the Economy 2030 Inquiry, which was set up by Mr. Bell when he was head of the Resolution Foundation think tank.

The inquiry’s final report proposed wealth taxes targeting inheritance, property, shares, landlords, pensions, and even luxury cars.

Its recommendations included capital gains tax upon death, National Insurance on rental income, and more than doubling the basic rate of the dividend tax to 20 percent.

Lady Shafik and Mr. Bell are now expected to collaborate closely as they draft plans for what is anticipated to be a tax-raising Budget.

Ms. Reeves faces difficult choices as she seeks to generate enough revenue to fill an estimated £50bn deficit in the public finances.

Warning of IMF bailout

Sluggish economic growth and high borrowing have created a volatile situation, prompting some economists to warn that Britain is heading towards an IMF bailout.

Lady Shafik previously worked under a Labour government, serving as the top civil servant at the International Development Department in 2008.

She has also held high-ranking positions at the IMF and the World Bank and was vice-chancellor of the London School of Economics.

Most recently, she was president of Columbia University in New York, a position from which she resigned over the treatment of Jewish students during anti-Israel protests on campus.