In a recent interview, Andy Burnham, the Makerfield MP and former mayor of Greater Manchester, outlined his potential approach to taxation should he ascend to the role of Prime Minister. While he insists on adhering to Labour’s manifesto promises of not raising income tax, VAT, or national insurance contributions, he hinted at reforms in business rates that could significantly impact the retail landscape.
A Commitment to Labour’s Principles
Burnham made it clear that he remains steadfast in upholding Labour’s manifesto commitments, particularly regarding income tax. “I stick by the manifesto and the promises that it made. So, let me be absolutely clear about that,” he asserted during his appearance on LBC with Andrew Marr. This statement comes as a relief to many constituents who have been wary of tax increases affecting working families.
Despite his commitment to the existing tax framework, Burnham acknowledged the need for some shifts within the tax system, particularly concerning business rates. He expressed an openness to revisiting the tax landscape to better support local businesses, particularly those that contribute positively to community life.
Revamping Business Rates
One of the most significant components of Burnham’s proposed tax reforms is his plan to adjust business rates. He suggested that larger warehouses, particularly those operated by major online retailers, may face higher tax rates. In contrast, he aims to alleviate the financial burden on traditional high street shops, pubs, and community businesses by significantly reducing or entirely removing their business rates.
“There is some room within that manifesto for movement on tax,” Burnham explained. “I believe there is a case for higher business rates on warehouses and the major developments we see on the outskirts of our cities, so that we can cut business rates for pubs.” He proposed a 20 per cent reduction in business rates for local establishments, emphasising the importance of nurturing the high street and supporting businesses that foster community engagement.
The Wealth Tax Debate
Calls for a wealth tax have intensified within the Labour Party, particularly from its left-wing factions. Recent polling revealed that an overwhelming 91 per cent of Labour members support increased taxation on the wealthy. One potential avenue for this is an adjustment to the capital gains tax (CGT), which is currently levied at rates significantly lower than income tax.
Louise Haigh, a key ally of Burnham, has advocated for a “fundamental redesign” of the tax system, suggesting that CGT should be taxed at higher rates—possibly up to 45 per cent—bringing it closer in line with income tax. Such proposals are indicative of an ongoing debate within the party regarding the fairness and effectiveness of wealth taxation.
Exploring Alternative Tax Structures
Beyond the immediate focus on income and business taxes, Burnham has previously proposed the replacement of council tax and stamp duty with a land value tax. This model would impose taxes based on the rental value of properties rather than their sale price. In 2023, he also suggested abolishing inheritance tax in favour of a national care levy, which would distribute the tax burden more equitably across the population.
These ideas reflect a broader ambition to rethink the UK’s tax system, making it more progressive and responsive to the needs of contemporary society.
Why it Matters
Burnham’s proposed tax reforms could significantly reshape the UK’s economic landscape, particularly for small businesses and local communities. As he navigates the complexities of tax policy, his commitment to Labour’s foundational principles will be tested against the pressing need for economic innovation. The outcomes of his proposals will not only affect the party’s electoral success but also the financial wellbeing of millions of citizens, highlighting the urgent need for a balanced approach to taxation and public service funding.
