A former Labour minister has said she wants Rachel Reeves to consider the “evidence” behind introducing a wealth tax in the UK.

Anneliese Dodds, who quit as international development minister in February over Sir Keir Starmer’s decision to slash the overseas aid budget, said she believed it was “important” that the government considers “who has the broadest shoulders”.

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Speaking to Beth Rigby on the Sky News Electoral Dysfunction podcast, Ms Dodds, the MP for Oxford East, said there had been a “lot of discussion” about a wealth tax – a direct levy on all, or most of, an individual’s, household’s or business’s total net wealth, rather than their income.

Ms Dodds, who also served as shadow chancellor when Labour was in opposition, said she had been “a bit sceptical about some of those claims for a long time because, of course, wealth is taxed in the UK”.

However, she said work carried out by the Wealth Tax Commission in 2020 had looked at various types of international wealth taxes and how it would be possible to deliver one in a UK context.

She added: “I would hope the Treasury is considering that kind of evidence, as well as other changes that have been put forward.”

The former cabinet minister also said that tax proposals outlined by Deputy Prime Minister Angela Rayner to Rachel Reeves should be “considered”.

In a memo that was leaked to the Daily Telegraph in May, Ms Rayner suggested to the chancellor that she increase taxes, including reinstating the pensions lifetime allowance and a higher corporation tax level for banks.

“We’ve seen the deputy leader of the Labour Party, for example, put forward suggestions as I understand it,” Ms Dodds said.

“I think it’s important for all of those to be considered now.”

Ministers have signalled they will not bring in a wealth tax to balance the books, with Business Secretary Jonathan Reynolds branding the suggestion “daft”.

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Speaking to GB News last week, Mr Reynolds said: “This Labour government has increased taxes on wealth as opposed to income – the taxes on private jets, private schools, changes through inheritance tax, capital gains tax.

“But the idea there’s a magic wealth tax, some sort of levy…that doesn’t exist anywhere in the world.

“Switzerland has a levy, but they don’t have capital gains or inheritance tax. There’s no kind of magic. We’re not going to do anything daft like that.

“And I say to people: ‘Be serious about this.’ The idea you can just levy everyone. What if your wealth was not in your bank account, what if it was in fine wine or art? How would we tax that? This is why this doesn’t exist.

“There’s a lot of populism out about this, and I’m frustrated. I see colleagues sometimes say this in parliament and I say: ‘Come on, get serious.'”

Ms Dodds said that while she had not spoken directly with Ms Reeves about a wealth tax, she believed the “trade-off we have to consider in a world of lots of difficult trade-offs is potentially making some big and significant changes early, or having to make many tactical changes through the parliament and potentially being forced into some of those difficult decisions anyway later on”.

The idea of a wealth tax has raised its head – yet again – as the government attempts to balance its books.

Downing Street refused to rule out a wealth tax after former Labour leader Lord Kinnock told Sky News he thinks the government should introduce one.

Sir Keir Starmer’s spokesman said: “The prime minister has repeatedly said those with the broadest shoulders should carry the largest burden.”

While there has never been a wealth tax in the UK, the notion was raised under Rishi Sunak after the COVID years – and rejected – and both Harold Wilson’s and James Callaghan’s Labour governments in the 1970s seriously considered implementing one.

Sky News looks at what a wealth tax is, how it could work in the UK, and which countries already have one.

What is a wealth tax?

A wealth tax is aimed at reducing economic inequality to redistribute wealth and to raise revenue.

It is a direct levy on all, or most of, an individual’s, household’s or business’s total net wealth, rather than their income.

The tax typically includes the total market value of assets, including savings, investments, property and other forms of wealth – minus a person’s debts.

Unlike capital gains tax, which is paid when an asset is sold at a profit, a wealth tax is normally an annual charge based on the value of assets owned, even if they are not sold.

A one-off wealth tax, often used after major crises, could also be an option to raise a substantial amount of revenue in one go.

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How could it work in the UK?

Advocates of a UK wealth tax, including Lord Kinnock, have proposed an annual 2% tax on wealth above £10m.

Wealth tax campaign group Tax Justice UK has calculated this would affect about 20,000 people – fewer than 0.04% of the population – and raise £24bn a year.

Because of how few people would pay it, Tax Justice says that would make it easy for HMRC to collect the tax.

The group proposes people self-declare asset values, backed up by a compliance team at HMRC who could have a register of assets.

Which countries have or have had a wealth tax?

In 1990, 12 OECD (Organisation for Economic Co-operation and Development) countries had a net wealth tax, but just four have one now: Colombia, Norway, Spain and Switzerland.

France and Italy levy wealth taxes on selected assets.

Colombia

Since 2023, residents in the South American country are subject to tax on their worldwide wealth, but can exclude the value of their household up to 509m pesos (£92,500).

The tax is progressive, ranging from a 0.5% rate to 1.5% for the most wealthy until next year, then 1% for the wealthiest from 2027.

Norway

There is a 0.525% municipal wealth tax for individuals with net wealth exceeding 1.7m kroner (about £125,000) or 3.52m kroner (£256,000) for spouses.

Norway also has a state wealth tax of 0.475% based on assets exceeding a net capital tax basis of 1.7m kroner (£125,000) or 3.52m kroner (£256,000) for spouses, and 0.575% for net wealth in excess of 20.7m kroner (£1.5m).

The maximum combined wealth tax rate is 1.1%.

The Norwegian Labour coalition government also increased dividend tax to 20% in 2023, and with the wealth tax, it prompted about 80 affluent business owners, with an estimated net worth of £40bn, to leave Norway.

Spain

Residents in Spain have to pay a progressive wealth tax on worldwide assets, with a €700,000 (£600,000) tax free allowance per person in most areas and homes up to €300,000 (£250,000) tax exempt.

The progressive rate goes from 0.2% for taxable income for assets of €167,129 (£144,000) up to 3.5% for taxable income of €10.6m (£9.146m) and above.

It has been reported that more than 12,000 multimillionaires have left Spain since the government introduced the higher levy at the end of 2022.

Switzerland

All of the country’s cantons (districts) have a net wealth tax based on a person’s taxable net worth – different to total net worth.

It takes into account the balance of an individual’s worldwide gross assets, including bank account balances, bonds, shares, life insurances, cars, boats, properties, paintings, jewellery – minus debts.

Switzerland also works on a progressive rate, ranging from 0.3% to 0.5%, with a relatively low starting point at which people are taxed on their wealth, such as 50,000 CHF (£46,200) in several cantons.

Former anti-corruption minister Tulip Siddiq’s lawyer was denied any information about the case against her in Bangladesh, Sky News understands.

Ms Siddiq resigned earlier this year over accusations she illegally received a plot of land in a new high-end development on the outskirts of Dhaka, Bangladesh’s capital, from her aunt, Sheikh Hasina, who was ousted as prime minister last year.

Bangladesh’s anti-corruption commission (ACC) claims the Labour MP received a 7,200sq ft plot in the diplomatic zone through “abuse of power and influence”.

However, Sky News understands an article published on Thursday morning saying the Labour MP for Hampstead and Highgate will face trial in Bangladesh over the allegations is the first Ms Siddiq had heard of it.

A source close to Ms Siddiq told Sky News her lawyer was in court every day last week to request information, but was denied it.

The report in the Daily Telegraph said that if the MP refuses to attend court in Bangladesh on 11 August, a trial will be held in her absence.

It is understood she will not be at the court then.

Ms Siddiq’s lawyer said: “For nearly a year now, the Bangladesh authorities have been making false allegations against Tulip Siddiq.

“Ms Siddiq has not been contacted or received any official communication from the court and does not and has never owned any plot of land in Purbachal.

“This longstanding politically motivated smear campaign has included repeated briefings to the media, a refusal to respond to formal legal correspondence, and a failure to seek any meeting with or question Ms Siddiq during the recent visit by the Anti-Corruption Commission (ACC) to the United Kingdom.

“Such conduct is wholly incompatible with the standards of a fair, lawful, and credible investigation.

“In light of these facts, it is now time for the Chief Adviser and the ACC to end this baseless and defamatory effort to damage Ms Siddiq’s reputation and obstruct her work in public service.”

The ACC and Professor Yunus’ press secretary have been contacted for a comment.

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Last month, Ms Siddiq accused Bangladesh’s interim leader, Nobel Prize-winning economist Professor Muhammad Yunus, of conducting an “orchestrated campaign” to damage her reputation and “interfere with UK politics”.

In a legal letter seen by Sky News in June, the MP also said comments made by Professor Yunus in a Sky News interview have prejudiced her right to a fair investigation, meaning the corruption inquiries should be dropped.

The interim leader, who took over after Ms Hasina was ousted last year following violent protests, said Ms Siddiq “has so many (sic) wealth left behind here” and “should be made responsible”.

Professor Yunus’ press secretary said he and the ACC “has no reason and scope to interfere in UK politics”.

“The Anti-Corruption Commission relies not on hearsay but on documentary evidence and witness testimony,” they said.