The influential Resolution Foundation is pushing for the Chancellor to restrict relief on capital gains tax and inheritance tax and introduce a council tax supplement of one percent on properties worth more than £2million. In a report published today the foundation argues that the wealthiest one percent of households are £800billion richer than originally thought, taking their total share of wealth from 18 percent to 23 percent.
The Foundation argues that the cost of the pandemic and an ageing population will cause health and welfare spending to rise by £38billion a year by 2030 so “wealth taxation will need to play a bigger role in the UK economy” in this decade.
Jack Leslie, an economist with the foundation, said: “The UK has undergone a wealth boom in recent decades, which has continued even while earnings and incomes have stagnated. But official data has struggled to capture these gains, and misses £800 billion of assets held by the very wealthiest households in Britain.
“With the country facing a decade of mounting fiscal pressures, now is the time for Britain to do a better job of taxing its record levels of wealth by reforming our capital gains, inheritance and property taxes.”
However, Professor Philip Booth, director of the Vinson Centre for the Public Understanding of Economics and Entrepreneurship, urged caution.
He said: “It is easy to assume that wealth is just a free lunch available for taxing. However, attacks on wealth amount to attacks on property rights and wealth taxes are therefore of questionable morality and fail to produce significant amounts of revenue. Much of the increase in wealth arises from increases in house prices and in the value of retirement savings due to low interest rates.
“The former must be addressed by allowing more houses to be built so that all can share in the accumulation of wealth… The reality is much more complex than this proposal suggests.”
Senior Conservative MP David Jones, who sits on the committee which scrutinises public administration, opposed new attempts to tax wealth.
He said: “Frankly, the economy has been so badly battered by Covid that we need to get people investing in it again. The last way of doing that is by taxing people.
“People need to know that if they invest in this country there will be a fair tax rate and they won’t be penalised with a wealth tax. It’s not a Conservative proposal and I’m pretty sure the Chancellor wouldn’t accept that.
“I think there would be an outcry among Conservative MPs if we were seen to be stalling the recovery by over-taxing business people and businesses that want to invest in this country.
A Treasury spokeswoman said: “Our priority right now is to support jobs and the economy. By protecting jobs and creating new opportunities through the Kickstart scheme and apprenticeships, we will be able to grow our economy.
“We’re committed to a fair and efficient tax system.”
