Rachel Reeves plots a shocking new tax no Chancellor should even consider - it's madness

The Chancellor is in a hole. Growth is slowing, inflation is climbing, jobs are vanishing and her black hole has ballooned from £22billion to more than £50billion. She carries most of the blame for this meltdown, as her tax raids on jobs and investment have backfired badly.

With the autumn Budget looming, Reeves is scrambling to find new ways to raise money, and the results could be brutal. Pensions, savings, inheritance and capital gains are all being openly touted as targets.

Having lost control of spending, she dare not confront Labour's left, so her only route is to raise yet more revenue from already hard-pressed taxpayers. That means nothing is off limits.

Now she's even considering the unthinkable - scrapping private residence relief. That would be the most reckless step any Chancellor has taken in modern times.

Most people have never heard of private residence relief. Yet it underpins one of the most basic assumptions of British life, that when you sell your own home, the place you live in, you will not be charged capital gains tax (CGT) on any increase in its value.

If you own a second property, such as a buy-to-let or a holiday home, then the taxman already takes a share when you sell.

Most accept that as fair. There is a clear investment element. But taxing someone's main home crosses a line that no Chancellor has ever dared step over. They assumed, rightly, it would plunge them and their party into a political abyss.

Nothing would cause more fury than imposing CGT on the sale of family homes. For Reeves even to consider it shows how cornered she has become.

This is not clever policy making. It's pure panic with an element of class warfare thrown in for good measure.

With this suggestion, Reeves really has jumped the shark.

Higher rate taxpayers would pay 24% of any gain they make on their home, while basic rate taxpayers would have to pay 18%, according to a report in The Times. The bill could run into tens of thousands.

There's another proposal out there. Think tank Onward wants Reeves is to impose an annual levy based on a property's value, to be collected when the home is eventually sold.

It suggested 0.54% a year for homes worth between £500,000 and £1million, rising to 0.81% for anything above that.

These fractions sound small, but they'd roll up year after year, and the cumulative effect would be devastating.

If Reeves acts, this would amount to a revolutionary change in Britain's tax system. The implications are massive.

A £500,000 home may sound like a fortune in much of the country, but in London and the South East it barely buys a modest flat.

And once Reeves sets the thresholds, they'll probably never rise. Thresholds never do these days. Let's take just one example. The £325,000 inheritance tax threshold has been frozen for 2009, and that will continue until at least 2030. That's more than two decades.

If this had kept pace with inflation, it would be worth more than £500,000 by 2030.

We can expect exactly the same to happen if Reeves the abolishes private residence relief. At first, a few wealthier people pay, then slowly, so does everybody else.

Unless it triggers a property crash, which is also likely.

The housing market would seize up as people delayed selling. First-time buyers would be deterred, fearful of one day being clobbered with a massive bill.

This is not just punitive, it's fiscal madness. I cannot think of anything more better designed to generate an economic "feelbad" sentiment.

People don't yet understand what is being contemplated. When they do, they'll be furious.

If Reeves pushes ahead, Reform and the Tories will have a field day. They'll pledge to axe it on day one. Taxing our homes could drive Labour from power for good. You can bet your house on that.