Former Health Secretary Wes Streeting has proposed introducing a wealth tax as part of his pitch for the Labour leadership, by equalising capital gains tax with income tax.
Streeting called for a "wealth tax that works" and said he estimated the reform could raise £12bn a year.
He told the BBC the change would address an unfair system that was "penalising work", and would encourage investment by offering lower rates of capital gains tax to "genuine" entrepreneurs.
Streeting resigned from government after saying he had lost confidence in Sir Keir Starmer's leadership, although the prime minister has defied calls from dozens of his MPs to step down after poor election results.
While Streeting's decision to quit the cabinet helped fuel intense speculation that he was planning a bid to replace Sir Keir as party leader, no candidate has yet to launch a formal challenge against the PM.
Streeting has since said he would seek to enter any potential Labour leadership contest.
When he met Sir Keir in Downing Street the day before he resigned from the cabinet, he told the prime minister directly he would be challenging him for the Labour leadership, Streeting told the BBC's Political Thinking podcast.
"As I said to the prime minister in my letter and privately, this is a government that lacks definition and also direction and vision," Streeting said. "When people don't know who you are, and what you stand for, they don't vote for you."
Streeting would need the support of 81 Labour MPs to trigger a leadership contest under the party's rules.
He said he had decided against that a few days before he resigned, after he had learned Greater Manchester Mayor and potential Labour leadership rival Andy Burnham had "found a seat".
Josh Simons announced he was standing down as the MP for Makerfield on Thursday last week, paving the way for Burnham to stand as Labour's candidate in the forthcoming by-election.
Streeting said: "It was clear that if we'd been plunged straight into a leadership contest by me or for that matter anyone else, I think it would have been seen as a deliberate attempt to get ahead of Andy Burnham's potential return."
In the meantime, Streeting has been setting out his policy agenda for his leadership campaign.
In his first major proposal, Streeting is suggesting reforms to capital gains tax, which is a levy on the profit made after selling an asset, such as property.
A report by Centre for the Analysis of Taxation in 2024 estimated reforming capital gains tax could raise £14bn.
The annual tax-free allowance for the levy is £3,000 and anything above this is taxed at rates that depend on a person's income band.
For example, higher or additional rate taxpayers have to pay 24% on gains in the current financial year.
Streeting is suggesting capital gains tax rates should mirror the three bands of income tax - 20%, 40%, 45%.
Under the proposal, a person's capital gains tax band would be calculated by adding up their income and profits from assets.
Streeting is also proposing closing loopholes that allow people to disguise income from work as capital gains.
On top of this, lower rates of capital gains tax would be offered to entrepreneurs who take risks building companies.
The policy is different to the wealth tax proposed by the Green Party of England and Wales.
The Green Party has suggested an annual tax of 1% on assets above £10m and 2% on assets above £1bn.
Asked about Streeting's proposal, Chief Secretary to the Treasury Lucy Rigby told BBC Radio 4's Today programme: "We already tax wealth in this country."
She added Chancellor Rachel Reeves has introduced "a host of measures" in her budgets that "try and make sure that tax is as progressive and fair as possible".
In the Political Thinking interview, Streeting was also asked about his position on Brexit, which was a focal point of a speech he gave last weekend.
In the speech, he said leaving the European Union following the 2016 referendum had been a "catastrophic mistake" and the UK should "one day" rejoin the bloc.
But Streeting told the BBC "in order to rejoin, there's something fundamental that would have to be true, which is, it would have to be the settled will of the country".
Streeting was also asked about the appointment of Lord Peter Mandelson as the UK's ambassador to the US.
Lord Mandelson was sacked last year after new revelations emerged about the extent of his relationship with the late sex offender Jeffrey Epstein.
"I wouldn't have appointed Mandelson based on what was known," Streeting said.
"I think he betrayed this prime minister. I think he's got no future in public life. I've made no contact with him since he left his job and was sacked."
The interview came after Streeting warned the Labour government was losing the fight against "nationalism", in his resignation speech to MPs.
You can listen to the full interview on the Political Thinking podcast, which is available on BBC Sounds.
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