Tony Blair’s think-tank has sounded a stark warning to Andy Burnham against crushing investment with ‘wealth taxes’.

The former PM’s institute said attempting to ‘tax our way to prosperity’ would be ‘bad policy and bad politics’.

The intervention came as Mr Burnham – who could take over in Downing Street in a fortnight – mulls broadening Labour’s so-called ‘mansion tax’ so it catches homes worth £1.5million instead of just £2million. 

In his first major interview last week, the ex-Greater Manchester mayor said he believed there is ‘room’ for the burden to be increased without breaking the party’s manifesto.

That ruled out hikes to income tax, national insurance and VAT – leaving elements such as council tax and capital gains tax in the crosshairs for the new administration. 

Swathes of middle–class homeowners could be hit as the Mail on Sunday revealed Mr Burnham is considering overhauling the ‘mansion tax’, which is due to take effect in 2028.

Plans to lower the threshold for paying the charge to homes worth £1.5million would mean more than 150,000 families – particularly in the South of England – being hit with four–figure tax hikes.

Tony Blair’s think-tank has sounded a stark warning to Andy Burnham (pictured) against crushing investment with ‘wealth taxes’

In an article said to reflect Sir Tony’s (pictured) views, the institute said attempting to ‘tax our way to prosperity’ would be ‘bad policy and bad politics’

It could prove a double whammy for homeowners in the region, as Mr Burnham is also considering replacing council tax with a system based on land values likely to leave people living in the South paying up to three times as much as those in the North, where property is generally cheaper.

In parts of London, a relatively modest four–bedroomed terraced house would fall above the new threshold.

Tory leader Kemi Badenoch attacked the plans as another example of Labour’s ‘politics of envy’.

Experts predict that forcing families to pay the mansion tax will only raise between £200million and £250million a year.

However, the charge would cause hardship for pensioners on fixed incomes and families who have stretched themselves to afford a home, as well as destabilising the property market.

As he closes in on taking over from Keir Starmer, Mr Burnham has made clear he wants to overhaul taxes on property and land. 

He has hinted at switching to an annual levy based on a proportion of the value of homes – something that could hammer residents of the South East where property prices have soared since the last valuations.

On the campaign trail in May, Mr Burnham said: ‘I’m personally keen to see reform of council tax. It’s a highly regressive tax, and I think it’s not justifiable based on those 1991 valuations, so I see a big case for land and property and business taxation to be changed.’ 

Senior Labour figures and unions have been demanding ‘wealth taxes’ to help fund another splurge on the public sector.

One proposal being bandied around is bringing CGT in line with income tax – despite the Treasury’s own calculations suggesting that could actually lead to tax receipts falling. 

Mr Burnham could replace Keir Starmer (pictured) as PM in a fortnight’s time

Writing in the Sunday Telegraph, Guy Ward-Jackson, a senior analyst at the Tony Blair Institute, warned that ‘Britain’s prosperity is not guaranteed’ and the next PM must ‘set out a new stall for growth and security’.

In the article, said to reflect Sir Tony’s views, he argued that increasing CGT would be ‘precisely the wrong message at precisely the wrong time’. It is levied on things such as sales of shares and second homes.

‘We must be a place where entrepreneurs feel they can take risks, build companies, and be rewarded for it – all the while contributing to jobs and growth,’ Mr Ward-Jackson wrote.