This video is on the web site of Church Action on Poverty right now, whose campaign for Fair Taxes I am pleased to support:
When Greg Philo first suggested a tax of this sort I admit I was not convinced.
Well, times change. The FT reports this morning (with apologies for lengthy quote, but it's a pretty important issue):
As Italy's economy and its banks lurch deeper into the eurozone sovereign crisis, some are calling for a one-off mega tax on Italians' substantial private wealth as a way to offset fears about its €2,000bn ($2,750bn) public debt.
“Private wealth in our country is close to €10,000bn. A tiny percentage of that can contribute in a major way to a step down in our total debt,” says Corrado Passera, head of Italy's largest bank, Intesa Sanpaolo.
The idea of a mega tax on Italians' total private assets has gained support in the past week as spreads on Italian debt compared with Germany remained close to a euro-era high — despite the European Central Bank's decision to buy Italian bonds.
Proponents of the wealth tax argue that it is the fastest way to make a notable cut. They also point out that swift action will allow less time for people to move their assets to tax havens.
A senior private banker who spent the summer at work watching the value of his clients' investments plunge in the market rout, agrees that ending tax evasion is vital but argues that a wealth tax is needed sooner because its impact will be felt within days not years.
“There's no time left”, he says, echoing comments made by Ms Marcegaglia, the head of Italy's business association this week. “We are already on the precipice”.
The unthinkable is becoming thinkable. Greg Philo was ahead of the curve.
The reality is that we are facing something little short of total meltdown. In that case asset values will be wiped out: paying a wealth tax then becomes a viable and welcome alternative to ensure that the state - whose existence and smooth operation is fundamental to the maintenance of wealth - is kept in place.
I have no idea if such taxes will happen, but it would no longer surprise me.
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This is the Ricardian ‘Capital Levy’. Labour ran on it after WW1 for one election and saw it to be unworkable, as did Keynes. It amounts to a fire sale, particularly when we’re in a supply-side glut.
I am keen to find a good way to tax wealth, a complete rethink on inheritance tax is needed to see if that can be the answer.
If we go for a special one-off measure to reduce national debt and/or fund national investment (because, let’s remember, many of the people asking for taxes like this are also fond of telling us that the debt isn’t a problem.. so, that being the case, why tax people to pay it off?) isn’t there an issue with the tax falling on the wealthy who don’t hide their wealth out of reach of the taxman, whilst those who do pay nothing?
How about instead of a tax, a compulsory bond. Require people to lend the government the money, and pay them interest at the average rate of goverment borrowing. Upon the death of the bondholder, the bond is cancelled.
Richard,
The unthinkable is indeed starting to become thinkable. The message is slowly getting through (despite the pro-City attitude of most media outlets) that the rich have caused this problem, are not suffering for it and instead are enriching themselves further. The rest of us see only misery.
Even right wing commentators are getting the message, Here’s Max Hastings on bankers (apologies for the DM link but he pulls no punches):-
http://www.dailymail.co.uk/news/article-2038147/Bankers-looters-suits-Weve-learnt-Lehmans-Brothers-crash.html
Please keep up the good work, your efforts are definitely having an effect on the propagandist narrative.
If you are going to tax wealth then I am sure like the uk there are three places that hold the vast majority of personal wealth
1- real estate
2- business ownership , private and via shares
3 – Pensions
Taxing 1 is going to be the easiest as its difficult to hide, 2 is going to cause problems for owners of businesses who suddenly need to realize cash to pay the tax , 3 is going to be a big problem for private pension holders when they look at the relative largess of public pensions.
A one off stamp duty on real estate may be the easiest way to do it but there will be howls of protest from granny who is poor but lives in a million euro/pound house she owned for the past 50 years … I’m sure once you get down to the nitty gritty and start giving exemptions to farmers , granny , large families etc etc the revenue raised will rapidly dwindle …
Note deferral until death is proposed by Greg Philo
This is actually one of the better thought out ideas but I note, as with almost any finance related article, comments are made that miss the point, accidentally or deliberately. The first comment suggests the potential for a ‘fire sale’ and the fourth highlights the issues around stumping up the dosh. I know Richard has pointed out, in comment five, that this is a deferred proposal, effectively an advance inheritance tax. Which makes a large part of comments one and four pointless.
This may come across as a bit of a rant, but I try to read, or view/listen in this case, with comprehension as a matter of course. If I believe I have something to add, or am enthused enough to comment, then I would consider it downright rude to base my comment on a skim read/view. But I’d be mortified if my contribution only served to demonstrate my own laziness or ignorance.
We can raise significantly more Tax Revenue just by enforcing the Tax legislation we already have. Any idiot can dream up new forms of taxation. Yet another, unenforced, tax is only window dressing, the illusion of action.
But we aren’t
Aren’t you’re ignoring the scale of the crisis we’re facing
Vince Cable calls it the equivalent of war and he’s right
Richard.
Don’t give up on collecting tax from those rich and powerful people who regularly avoid/evade it via nasty schemes dreamt up by equally nasty people hiding away in three pigsties close to UK shores.
There is BIG money involved here and some of these people are paying less tax than your window cleaner – a profession not renowned for tax transparency.
Little use in introducing new (one off) tax laws until present laws are properly enforced.
I had a look at this. Regardless of the merits of the proposal, it is political campaigning by a charity.
This charity’s charitable objectives do not include lobbying government over the ways that taxation is raised. This is very different to saying that more tax should be raised and then spent on alleviating poverty, and so it falls foul of the Charity Commission’s rules on political campaigning by charities.
Absolute nonsense
A charity is allowed to offer solutions to poverty
This is one
Only those who want to bock questions being asked comment as you do
And they always have interest in maintaining poverty
No, that’s not the reason for my comment, and please let me clarify: if this charity had stated “we think that government should raise more tax revenue, and spend the results on alleviating poverty by doing x, y and z” I would have zero problem with that, and depending on x y and z, potentially support the aim. That is acceptable political campaigning under the Commission rules.
However, what they are saying is that we think taxes should be raised by doing x , and it is this bit that makes this campaign potentially a non-charitable political campaign. Lobbying on how taxes are raised is not in itself a charitable aim.
“Political activity, as defined in this guidance, must only be undertaken by a charity in the context of supporting the delivery of its charitable purposes. We use this term to refer to activity by a charity which is aimed at securing, or opposing, any change in the law or in the policy or decisions of central government, local authorities or other public bodies, whether in this country or abroad.”
http://www.charity-commission.gov.uk/publications/cc9.aspx#8
Well since the comments made seem to fit well and truly into the charitable purpose of relieving poverty it seems very hard to see what you’re aiming at – unless of course your aim is to ensure that poverty is not relieved.
Is that it?
Ok. The reason I say this doesn’t fit with the charitable objectives is that looking at the video and the charity’s web page, the emphasis is on making well-off people pay their ‘fair’ share. There is virtually nothing about what the proceeds of this expropriation would be used for. In fact, it is stated in the video that the proceeds would be used to pay off the national debt: campaigning to expropriate assets to pay off the national debt is in itself not a charitable aim.
More generally I don’t like the idea; not because I think that the top 10% by asset wealth shouldn’t pay more tax, but because the taxation system must have a degree of certainty (as opposed to the arbitrary nature of this idea). There is a rule of law element to this too. Trust in government would be weakened, and implicitly this suggestion actually encourages tax avoidance and evasion. If government is going to come for your assets anyway, you may as well try to avoid a double hit.
The Mirrlees review (I know you don’t like it, but I hope you will give the process a chance) offers an opportunity to re-design the tax system to encourage innovation, employment, be progressive and redistributive at the same time. Measures that look more like theft are as morally repugnant as evasion in the first place.
So you don’t like it so you say it’s uncharitable
Is that your definition of charity?
And you haven’t answered my questions
First off, everyone over the age of 18 who is employed / self employed/ drawing benefits or an employee’s pension, should complete a statement of income / income tax form / self assessment and verify that it is a true reflection of their income. It then becomes a simple matter for HMRC to impose a levy on those whose incomes exceed a certain threshold. Eg a once off 15% tax levy on incomes over say 75,000 p/a. The levy system operated successfully in South Africa for many years pre 1994. The annual tax filing system, for all, still does. Interesting is that at a future point the (loan) levy was returned to the taxpayer with a nominal amount of interest. There again, its quite possible that if point one were enforced here, a levy / wealth tax would be unnecessary.