The Chancellor has reportedly dismissed demands to increase capital gains tax in next week’s Budget, following warnings that the change could stifle economic growth.

In recent months, a number of leading Labour figures have pushed for John Healey to increase the levy.

The tax is applied to the profit made from selling off assets like a house or shares.

But Mr Healey has apparently rejected the pitch from his Government colleagues over fears it could drain Treasury revenues if high earners relocate abroad or delay asset sales.

A number of wealthy individuals have already left Britain, reportedly as a result of changes to the tax system introduced by Labour.

The Chancellor has acknowledged that Britain finds itself in a “tough” position ahead of the Budget, and is reported to be downplaying the prospect of major revenue-raising measures in his October 28 statement.

Cabinet ministers Wes Streeting and Louise Haigh, a staunch ally to Prime Minister Andy Burnham, had previously discussed putting up capital gains tax during the summer, prior to the change of leadership in Downing Street.

For basic rate tax payers, capital gains tax (CGT) is charged at 18%. For higher and additional rate tax payers, the CGT rate is 24% making it substantially lower than the 40% charged in income tax on those earning more than £50,271 and £125,140 respectively.

Last year, HM Revenue and Customs estimated that lifting the higher rate of CGT by 10% would reduce the Treasury's receipts by £3.6billion in 2028-9.

The call for an increase in capital gains tax has divided allies of Mr Burnham. Lord O’Neill of Gately, who has advised the Labour leader and worked on the Northern Powerhouse project, told The Times that “raising capital gains tax would send very much the wrong message to business”.

The biggest revenue raising measure set to be in the Budget is an increase in the rate banks pay on their profits, widely reported across the media last week.

That is expected to fund cost-of-living support for households and businesses.

A wealth tax has also been mooted as a possibility – a policy that analysts suggest could disproportionately impact London.

The Right-leaning Centre for Policy Studies has warned against both a hike in capital gains or the imposition of another wealth tax.

The think tank said the Chancellor was told that a wealth tax would make the UK the most expensive place to own a home among countries in the Organisation for Economic Co-operation and Development.

They include most of Europe, America, Canada, Korea, Japan, Australia and New Zealand

A report published last year found that London had suffered a bigger exodus of the super-wealthy than any city in the world except for Moscow, new data shows.

Hedge fund tycoon Chris Rokos, who paid £330 million in taxes last year, making him Britain’s third-biggest taxpayer, has also relocated to Greece where the tax set-up is more favourable.

Sarah Coles, head of personal finance at investment platform AJ Bell, said ruling out a CGT rise was “probably a sensible move from a tax revenue perspective”.

She said: “The August tax receipt figures were a useful reminder that for this particular tax, tightening the screw doesn’t always raise more money for the public finances.

“In the months since the start of the new tax year, the Treasury has taken less in CGT than a year earlier.

“That suggests the dramatic cuts in the annual exempt amount and the hikes in the rate for stocks and shares haven’t boosted the tax take as the Treasury might have hoped. People simply changed their behaviour to get around it – realising gains before a change and then hoarding assets for as long as possible afterwards, or simply deferring gains in the hope of waiting out higher taxes.”

Meanwhile, Conservative leader Kemi Badenoch is due to warn the Government to slash its spending plans, and reduce its borrowing at the Budget.

In a speech on Tuesday, she will urge Mr Burnham and his Chancellor to “live within our means”.

She is preparing to highlight the Tory plan for a £70bn package of cuts to spending – including to welfare and the Civil Service headcount – as a place to start.

Pre-Budget polling by Ipsos has meanwhile revealed that the majority of the public have a mixed opinion of the Chancellor, as 67% of them believe he is doing neither a good nor bad job.

The survey of 1,077 Britons carried out between October 9 and 12 also found that 65% of the public is expecting some form of tax rise at the Budget.