Andy Burnham is being urged to impose a barrage of new taxes on pensioners and property to balance the books.
A form of 'wealth tax' and massive levies on homes in London and the South East are among the measures being pushed by one of Labour's favourite think-tanks.
The Institute for Public Policy Research (IPPR) also suggests extending National Insurance to those over the state pension age to address the 'striking' gap between older workers and younger graduates.
The proposals come as Chancellor John Healey gears up for a pivotal first Budget on October 28, with the public finances under huge strain.
Mr Burnham refused to rule out yet more tax rises this week, pointing to the impact of the Middle East crisis.
Labour MPs have been demanding moves to raise more revenue instead of cuts to spending, despite the burden already heading towards an all-time high.
Andy Burnham, pictured on a visit to a supermarket this week where he was promoting a youth jobs drive, has previously advocated a major overhaul of council tax
The IPPR report calls for council tax and stamp duty to be replaced with a proportional property tax set at an annual rate of 0.65 per cent.
It admits there would be 'winners and losers', with residents in areas where house prices are high potentially facing a big hit.
Mr Burnham has previously advocated similar proposals for a Land Value Tax, but critics warn people who bought properties when they were cheaper could suddenly need to make cash payments they cannot afford.
Many families in the South East borrow heavily to afford homes, and would be confronted with skyrocketing charges.
The think-tank also backs the idea of increasing the rate of capital gains tax to the same as income tax.
Wes Streeting, now Defence Secretary, described such a move earlier this year as a 'wealth tax that works'.
Those over the retirement age and still earning £45,000, £70,000 or £105,000 currently face tax rates of 20 per cent, 40 per cent and 60 per cent.
A younger graduate repaying a student loan and paying employee national insurance would face rates of 37 per cent, 51 per cent and 71 per cent.
Charging national insurance to workers above state pension age could help narrow that gap, according to the report.
The IPPR says change is needed as the population ages – with the proportion over 65 set to climb from 18 per cent in 2024 to 27 per cent in 2075.
Oxford University professor Ben Ansell, the report author, said: 'Ageing is going to become by far the biggest source of pressure on the public finances.
'Yet our tax system has increasingly shifted responsibility towards younger workers while protecting many of those who have benefited most from decades of rising property and asset wealth.
'Reform is politically difficult but avoiding it has given Britain an ever more complicated tax system.
'We need a new fiscal contract: one that raises the revenue the country will need, shifts more of the burden from work towards wealth and property, and is honest with the public about who pays and why.'
The report comes amid growing speculation that Mr Healey could put up taxes in the Budget.
Capital Economics, a consultancy, has predicted they may go up by as much as £25billion.
The Chancellor will need to find £5billion more for defence as well as paying for a series of cost-of-living announcements Mr Burnham has made as well as an overhaul of social care and a major programme of council house building.
The PM said this week, when asked whether he would have to put up taxes, that he 'won't be unrealistic' about the state of public finances and that Britain is in a 'challenging position'.
Economists believe the Government's Budget 'headroom' has been reduced sharply from £24billion at the time of the Spring Statement with rising borrowing costs caused by the Iran war adding to pressure on the Treasury.
The Resolution Foundation think-tank estimates it has fallen to £8billion.
Mr Burnham has suggested council tax is too low in the South East, and said he is 'persuaded' of the argument for a LVT.
That would be based on the undeveloped value of land, but it is far from clear how the details would work in practice.
Modelling from Tax Policy Associates earlier this summer underlined the huge impact there could be on the capital and surrounding counties - while other areas benefit.
The think-tank found that an annual levy of 1.28 per cent of the land value would roughly cover the current revenues from council tax and stamp duty.
But the estimates - which they stressed were only illustrative - suggest that owners of a band F flat in Islington would be paying £12,000 a year, instead of £2,900 in council tax.
Modelling from Tax Policy Associates earlier this summer underlined the huge impact of an LVT on the capital and surrounding counties - while other areas could benefit
Someone who bought a band H property in Westminster or Kensington that has soared to be worth millions of pounds would need to find £44,000 and £54,000 respectively.
Outside the M25, the owner of a Band F home in Guildford would be facing a £6,200 a year charge, instead of £3,500 in council tax at present.
A Band F in Brighton attracts similar council tax currently, but would be in line for an £8,700 annual bill.
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