Rachel Reeves is facing pressure from members of her shadow cabinet to raise capital gains tax in her first autumn budget if Labour is elected on July 4.

Front row Labour MPs want the shadow chancellor to raise capital gains tax rates closer to income tax rates to help fund public services, at a time when Reeves is reportedly considering up to 12 new revenue-raising measures.

The move reflects a growing consensus on the left that capital gains tax, which is levied on profits from the sale of major assets such as shares and property, should be abolished because it is typically lower than income tax. Sources cited by the Guardian claim this would raise billions.

But an increase would be anathema to many in the City and could jeopardise the success of Reeves’ long-running “love bombing” of the business and investment community.

A source told the Guardian the shadow chancellor wanted to take a “kitchen sink” approach to raising tax revenues and driving investment in public services. The same person admitted: “That’s not what they’re presenting to the public at the moment.”

Kitchen sinking, the practice of a new boss deciding to release all of a company’s bad news at once, is a common practice in the business world. It was most famously used by Dave Lewis after he took over as CEO of Tesco in 2015, following a year when its profits had fallen by almost £1.5 billion.

The budget revelations come at a time when attention is increasingly focused on the Labour Party, which must show how it intends to finance a number of its economic plans without raising taxes or making deep cuts to numerous government departments.

Several cross-party think tanks, including the Institute for Fiscal Studies, have accused both Labour and the Conservatives of being dishonest with the public about their tax and spending plans as the two parties vie for the nation’s vote. And Labour, which has committed to the same fiscal rules as the Conservatives, is facing a fiscal black hole, having promised not to raise key tax rates while eschewing austerity.

A report published on Tuesday by the Resolution Foundation think tank said that current forecasts would require the next government to cut the budgets of protected departments such as justice, local government and the Home Office by £19 billion a year.

A Labour spokesman told The Guardian: “We have fully costed and fully funded the plans and have set out the specific tax loopholes we would close to inject cash into our public services immediately. Nothing in our plans requires additional tax rises and there will be no return to austerity if Labour is elected on July 4.”

The Labour Party is expected to publish its manifesto next week.