Party chiefs to widen debate over 'taxing rich'

The debate over tax is to be fuelled at this year's Labour Party conference when members will be asked to consider whether the Government's fiscal policies need reform.

A policy paper, drawn up by senior party figures including ministers, asks how the Government can modernise taxes and benefits and asks "are our principles of taxation correct?" The document is likely to kick off a fresh argument about whether the richest should pay more to help middle-income earners and the poor.

Peter Hain, the Leader of the House of Commons, was rebuffed by Downing Street last week when he suggested that tax rates for the very rich could be increased.

The document, entitled Britain in the Global Economy, also asks party members to express views on "how can we modernise tax and benefit system to tackle poverty?"

The policy debate chimes with an intervention by Peter Mandelson, who said: "If you want to continue the transformation of your welfare system, both to extend its embrace and raise its standards, then obviously the question arises as to how you will fund that."