My friend and co-author Howard Reed has a thoughtful piece on the Open Democracy site on wealth taxes. In it he argues:
Private households in the UK own an estimated £10.3 trillion in property and other assets, most of which is relatively lightly taxed. Following the 2008 financial crash, the need to find additional public resources to reduce or obviate the need for painful spending cuts and fund growing long-term demand for public services makes wealth an attractive potential tax base. However, while it is generally accepted that the current system of property and wealth taxation in the UK is highly flawed, there is no broad political consensus on whether and how different forms of wealth should be taxed. There is also a lack of evidence about the potential impact of different approaches.
As he concludes, the time for more work on this issue has arrived, to plug the gap in the government's finances, to get rid of some horrible taxes (like Council Tax) and to create greater equality in our society and so enhance opportunity for all.
I should add we're hoping to be doing more work on this issue together in the future.
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I read recently that inheritance tax only harvests about 3% of its potential due to avoidance techniques! I found this shocking.
That may eb a little high – but not by much
As the 0.1% are intent on contributing as little as possible by way of income tax or corporation tax, this looks like a sensible option…
“Balls attacks Universal Benefits”
http://www.craigmurray.org.uk/archives/2013/06/balls-attacks-universal-benefits/
And he is
And I do not agree with that move, at all
Although my main support is for LVT, which would partly address wealth inequality, I cannot see why we can’t have a simple wealth tax as well.
Do you have any ideas of how this could work, Richard? It could be left to individuals to declare any assets they hold over, say, £1m with penalties for non disclosure and a, say, 1% pa levy. There could be some deferment plus interest to allow for sale of assets.
I was prompted to think about this on reading about the purchase by the National Gallery of a Constable painting which they had displayed for many years, from the owner for a multi £10m price. If LVT were introduced at a high percentage, leading to reduction of property prices, the assets taxed could also include, in effect, the value of buildings. There would be no need for the state to undertake mass valuations, this would be left to the taxpayer.
Of course, this would be declared horribly unfair by those affected. Ha ha ha.
However, I am sure that there would be difficulties in establishing exactly who would pay (British passport holders?) and perhaps the location of the assets.
i rather suspect that any political party proposing a tax on homes (unless we are talking mansion tax type values) is not going to be elected any time soon.
Not sure how much of the £10.3t is wrapped up in £2m+ type properties but i suspect not much of it, so you are really looking at a vote loser
I think you’re ignoring the fact that the world is changing
Even this gov’t knows that
Site value rating (local LVT) will be in the next LibDem manifesto. It is already in the manifestos of the Green and Co-op parties. Labour needs to start talking about this with the LibDems as future partners. Council Tax is the most regressive tax we have and revaluation must be addressed soon. The parties cannot sweep this under the carpet forever.
FYI, when a study was made to calculate the value of UK plc in about 2004, the total came out at £5tr – and the value of residential properties was estimated as £3.5. Since that time house prices have risen massively, and the decrease since the bubble burst has been modest.
A good start to taxing wealth would be the complete abolition of the Principal Private Residence Relief. I have no idea why homes should be exempt from Capital Gains Tax when almost everything else isn’t, at the very most there could be some sort of holdover relief.
Currently a person selling an existing home and making a large gain pays no tax, whilst an individual that invested in something else and made exactly the same gain has to pay the tax, even if they only make the sale to fund the purchase of a home.
Why collect the land value only when a transaction occurs when you can have a large revenue stream all the time with LVT?