Sir Keir Starmer’s Tax Rises: A Closer Look at the Definition of "Working People"

In a recent interview, Sir Keir Starmer, the leader of the UK Labour Party, sparked a significant debate regarding the definition of "working people" and the potential for tax increases targeting those who own shares and assets. This discussion comes in the wake of Labour’s election-winning manifesto, which promised not to raise taxes on working individuals. However, the ambiguity surrounding who qualifies as a "working person" has left many questioning the implications of this promise.

Defining "Working People"

When pressed to clarify his definition of a "working person," Starmer articulated that he envisions someone who actively earns their living, typically through a regular paycheck. He emphasized that these individuals often lack the financial means to "write a cheque to get out of difficulties," implying that they are not financially insulated like those who derive income from investments or assets.

This definition raises critical questions about the Labour Party’s tax policies. During the interview, when asked if individuals whose income comes from assets, such as shares or property, would be considered working people, Starmer responded unequivocally: "Well, they wouldn’t come within my definition." This statement suggests that the Labour Party may be open to increasing taxes on those who earn income through investments, a move that could have significant implications for wealthier individuals.

The Taxation Debate

The discussion around taxation has intensified, especially after government ministers hinted at the possibility of raising national insurance contributions for employers. Tax experts warn that such increases could ultimately be passed on to employees, potentially resulting in lower wages. This scenario raises concerns about the economic burden on the very individuals Starmer claims to represent.

Starmer’s comments have led to speculation about which specific taxes might be targeted for increases. Inheritance tax and capital gains tax have emerged as two likely candidates. Inheritance tax is levied on the estate of a deceased person, while capital gains tax applies to profits made from the sale of capital assets, including shares and second homes. Currently, capital gains tax is imposed on personal possessions valued at £3,000 or more, which could encompass a wide range of assets.

Clarification from Number 10

Following Starmer’s remarks, a spokesperson from Number 10 clarified that individuals with modest investments, such as small savings in stocks and shares, would still be considered working people. The spokesperson noted that Starmer was specifically referring to those who primarily derive their income from assets. This distinction is crucial, as it highlights the Labour Party’s intention to differentiate between working individuals and those who may be financially secure due to their investments.

The Chancellor’s Position

Rachel Reeves, the Chancellor of the Exchequer, has echoed Starmer’s sentiments, indicating that difficult decisions regarding spending and taxation lie ahead. In August, she stated that the government would need to make a series of challenging choices, which she plans to outline in detail during the upcoming budget announcement. Both Starmer and Reeves have warned of the "tough" decisions required to address a reported £22 billion black hole in the nation’s finances, a figure that has since been revised to £40 billion.

Reeves has also indicated that she would be rewriting the government’s fiscal rules to allow for increased borrowing for public investment. This move aims to counteract years of declining public investment and to stimulate growth in various sectors, including technology and clean energy.

Conclusion

As the Labour Party prepares for its upcoming budget announcement, the debate over the definition of "working people" and the potential for tax increases on asset owners continues to unfold. Sir Keir Starmer’s comments have ignited discussions about the fairness of tax policies and their impact on different segments of the population. With the Chancellor poised to unveil a budget that addresses significant financial challenges, the decisions made in the coming weeks will undoubtedly shape the economic landscape of the UK for years to come.

The clarity around who qualifies as a "working person" and how tax policies will be structured will be crucial in determining the Labour Party’s approach to governance and its commitment to supporting those it claims to represent. As the political landscape evolves, it remains to be seen how these discussions will influence public sentiment and the party’s electoral prospects.