THOUGH it will do nothing to derail Labour’s unstoppable journey to a famous victory on July 4 — as certain as anything can be in these febrile political times — nobody can now doubt that hefty tax rises will inevitably follow.

Exactly what taxes will rise or when we cannot yet divine. But as sure as Keir Starmer’s dad was a toolmaker, they’re on their way. Not so much the usual Tory scaremongering of ‘Labour’s secret tax bombshell’ as a huge red neon sign, hidden in plain sight, saying ‘Labour tax rises this way’.

If you’re saving for a pension or nursing a nest egg with some nice capital gains or living in a valuable home, you can be pretty sure that, one way or another, Labour is coming for you. So brace yourself.

Starmer claims ‘nothing in the Labour manifesto is going to require us to raise taxes’ beyond the trivial amounts he’s already announced. True, but also disingenuous. For it implies Labour will only do what is in its manifesto, which recent history shows is nonsense.

When Gordon Brown became chancellor in the last Labour government 27 years ago, he immediately made the Bank of England independent of the Treasury and abolished dividend tax relief for pension funds, a move which marked the beginning of the end of Britain’s world-class private pension provision.

Neither policy was in the 1997 Labour manifesto which swept him and Tony Blair to power. Starmer and his soonto-be chancellor Rachel Reeves will have similar surprises up their sleeves. They might not yet be fully formed. But they are in the making.

In some ways they have no choice. Labour will inherit a tight fiscal straitjacket in which ‘unprotected’ departments like the Home Office and Justice face cuts of £10 billion to £20 billion, depending on how much the budgets of ‘protected’ departments, like Health and Defence, are increased. After railing for years against socalled Tory austerity, a Starmer government can hardly start by cutting public spending further.

The small tax rises Labour admits to in its manifesto provide no relief. It has already allocated the extra revenue to spending on health and education. Labour might not get even the pittance it envisages.

The couple of billion it hopes to raise from VAT on private school fees takes no account of the extra cost of accommodating private school kids in the state sector because their parents can no longer afford the fees. The tougher tax regime for non-doms assumes none will leave our shores for friendlier tax climes, which is clearly stupid since many have already gone. In both cases — and in the complicated matter of higher taxes on private equity gains, which could also provoke a rush for the door — Labour could easily face a revenue shortfall it will have to make up with other (as yet unannounced) taxes.

Even more important are the pressures that inevitably crowd in on a Labour government to spend more on public services. Labour claims that nothing in the public realm works any more.

Everything is broke. The NHS is ailing, social care failing, schools crumbling, councils bankrupt. Yet in the face of this apparent carnage, the Labour manifesto proposes only the most modest of tweaks.

That cannot hold. The clamour from the backbenches, packed to the gunnels with novice MPs largely ignorant of economics or fiscal policy but steeped in the virtues of public spending and big government while desperate to deliver some red meat to their constituency parties, will be irresistible.

Their demands cannot be assuaged by more borrowing. The supposedly prudent Starmer-Reeves Labour Party is already planning to borrow £17 billion more than current plans over five years to pay for all manner of ‘green stuff’. Given it’s also committed to seeing our national debt fall as a share of GDP before the decade is out, that leaves no headroom for even more borrowing.

In any case, ever since the disastrous ClusterTruss in the autumn of 2022, the bond markets, where governments go to borrow, take an especially dim view of extra debt for more spending or tax cutting when the national debt is already almost 100 per cent of GDP. The last thing Starmer-Reeves need is another financial meltdown in the autumn of 2024.

That leaves taxes. But which ones? Labour has promised not to raise income tax, VAT or National Insurance, which I suppose we can take at face value. Together they account for over 60 per cent of the total tax take which, at more than £1 trillion a year, is about £650billion. So still about £400 billion of taxes to play with.

Labour has been careful not to rule out increases in capital gains tax, falling back on the hoary old politicians’ weasel words of ‘no plans’ to do so. At the moment basic rate taxpayers face 10per cent CGT on the sale of assets (18 per cent for residential property) and higher rate payers 20 per cent (24 per cent on residential property). So CGT rates are much lower than income tax rates of 20 per cent, 40 per cent and 45 per cent.

Align CGT with income tax and, hey presto, billions more will flow into the Treasury coffers. What it will do to investment, risk-taking and entrepreneurship is another matter. But if you’re Reeves and desperate for quick bucks you might not care.

Then there’s pension tax relief. At the moment you can deduct your pension contributions at your marginal rate of income tax, which is a particular benefit for higher earners paying the 40 per cent and 45 per cent marginal rates. It costs a lot in lost revenue — about £30billion a year at the last count, much of it going to the more affluent, which makes it a dripping roast for Labour.

If the tax relief was confined to the basic rate for everybody — or even a standardised 25 per cent — then billions more would flow into the Treasury’s coffers. Lovely jubbly.

Labour could also look at council tax for more money. I doubt it would be brave enough to revalue the council tax bands which, ludicrously, are still based on 1991 property prices. But it could well introduce some premium bands for millionpound-plus homes and distribute the proceeds to poorer areas. This would essentially be a mansion tax on London and the South, sold as ‘levelling up’.

Add in some smaller tax rises — a billion here, a billion there (it soon adds up to real money, as Ronald Reagan once said) — and it’s possible Reeves could raise an extra £20billion to £25billion in an autumn Budget.

If you’re on a decent income, saving for a pension, with a reasonably valuable home and capital gains you’re thinking of realising, then it’s probably time to batten down the hatches and prepare for the coming tax raid.

Scaremongering, Labour will say. Our plans for economic growth will raise revenues without higher taxes, it claims. Of course growth can work wonders for a country’s fiscal position.

On Thursday someone in Team Starmer said to me, absurdly, that growth would take off from day one of a new government, as if there was a button in the Treasury marked growth and all you had to do was press it.

The problem is that, though

Tax rises are as sure as Keir’s dad was a toolmaker

Everything is broke, yet they propose tweaks

Starmer claims growth to be his ‘core mission’, he has no policies that will suddenly ignite it. No tax reforms to encourage investment. No tax cuts to incentivise risk-taking or hard work. No deregulation to unleash the animal spirits of new, emerging companies.

Yes, his hopes of a housebuilding boom by overcoming our anti-development planning processes would generate more growth, but that’s some way down the road. It will take time and will not be as easy to do as Labour makes out.

Moreover, so many other measures he and Reeves propose involve enmeshing business and investment in a bigger, more intrusive, more activist state. A revolution in growth thanks to bigger government? I’ll believe it when I see it.

So, inevitably, it’s back to more tax to fill the myriad gaps in Labour’s plans and ambitions. The fact that Labour isn’t telling us doesn’t make it any less certain. Not with Starmer at the helm. After all, he fought two general elections urging us to vote for Jeremy Corbyn as prime minister. Then kicked him out of the party. He became Labour leader on a Corbynista platform. Then ditched every bit of it.

So tax rises post-election that were denied during the election? Piece of cake. Where do I sign, he’ll say. It’s too late to do anything about it. But at least you’ve been forewarned.

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