Rachel Reeves and the UK's 'most hated' tax

"It's hard not to feel some pity for Rachel Reeves," said Mark Littlewood in The Telegraph. As she prepares for her Autumn Budget, the chancellor finds herself facing an impossible "three-pronged conundrum".

First, the fiscal picture is bleak: Reeves needs to plug a black hole in the public finances of between £20 billion and £50 billion, depending on your estimate. But secondly, "she cannot cut government expenditure at all" – Labour's backbenchers have already cried blue murder at attempts to even "marginally trim" our ballooning welfare state. Thirdly, she has boxed herself in with her campaign pledge not to raise tax on "working people" by increasing income tax, National Insurance or VAT.

That fiscal straitjacket has left the Treasury desperately casting about for other tax-raising schemes, said Chris Blackhurst in The Independent. A wealth tax? A mansion tax? A gambling tax? Word is that her latest wheeze will be targeting people's inheritance. Reeves' advisers "know that people are sitting in homes that have soared in value... and they want some of it".

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The fact is, Reeves "needs money", said The Guardian, and targeting inheritance is a fair way to raise it. She is reportedly considering either placing a lifetime cap on the value of property or other assets a person can hand down, or cutting the "seven-year rule" that allows a person to pass on gifts tax-free up to seven years before they die. Both modest amendments would affect "only a wealthy minority": fewer than 5% of all deaths attract inheritance tax.

Yet the policy would be "greeted with horror", including by many Labour voters, said Stephen Glover in the Daily Mail. Polls show inheritance tax is "the most hated tax in the country" – resented even by those who don't have to pay it. Why? Partly because more and more striving middle-class families are being dragged into its long-frozen £325,000 threshold. But also because most people recognise the inherent "injustice of being forced to pay tax on money that has already been taxed once", when it was first earned.

Whether it's taxing inheritance, wealth, or capital gains, soaking the rich is "the left's new magic money tree", said Robert Colvile in The Sunday Times. But it won't be enough. The rich already pay their fair share: "the top 1% earn 13% of the money but pay 28% of income tax". Nor do they hoard their wealth "in vast caverns of gold coins, Scrooge McDuck-style". Much of it is bound up in companies, and taxing them would hamper growth. Even then, if we grabbed a "whacking" 15% of everything the UK's 350 richest people own, it would cover only a year of the UK's debt interest payments.

Something's got to give, said Polly Toynbee in The Guardian. Defence, health, old age, infrastructure – the country needs money. Everyone will have to pay more: the rich and the rest of us. Reeves must be radical in the next Budget. Even income tax, not raised since 1975, "can't be taboo".