In September the FT asked its readers if they supported a wealth tax.
More than 1,000 replied. The result was surprising:
Now of course it is entirely possible that a whole host of tax justice campaigners invaded the FT website and gave these answers. I doubt it, but it is possible. I am saying this simply to make clear that this is not a representative sample. However, the results are still interesting. For example, the idea that the taxable wealth starts at £1 million appears quite strong:
That there are reservations about including tax incentivised assets within the scope of a wealth tax, which I have indicated to be a massive limitation on its potential base, excluding most wealth from any potential charge, is clear:
More than 80% of all wealth is taken out of account if a person's main home, their pensions and their ISAs are excluded from a wealth tax.
Attitudes to capital gains tax reform were interesting:
In our survey, 26 per cent of respondents said they would definitely support lifting CGT tax rates to income tax rates, while a further 26 per cent said they would probably support it. In contrast, 35 per cent of readers registered their opposition – with 24 per definitely against and 11 per cent probably opposed.
Council tax reform was also discussed:
Around 45 per cent of respondents said they were definitely or probably against reforming the valuations to raise more tax and 41 per cent said they would definitely or probably back a revaluation.
Inheritance tax created the same divide:
Possible increases to inheritance tax were also rejected by a modest majority of FT readers. About 48 per cent said they would definitely not or probably not support an IHT increase and/or cuts in exemptions. Some 43 per cent of people said they would definitely or probably support such increases.
So what does this prove? Three things, I suggest. First, such surveys are not representative. Second, opinion is sharply divided. And, third, in that case and given the bias of this government, this is a red herring. There is no chance of a wealth tax at present, and debate on it distracts us from the real issues that are of concern. Maybe that is why the FT is interested in the issue.
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If the survey was based on just these three questions I don’t think it was well enough designed to elicit opinions about a wealth tax. I can really only take what would have been my responses had I participated. My attitude would have been governed by how such a tax would affect me, and I know that it would be conditioned by factors that link the questions. For example, I would feel much more positive about a wealth tax that included my main property and pension fund if the threshold was set high. If it was set as low as £250,000 or even £500,000 it would capture in its grasp almost every houeeholder in the Uk and let off those that have chosen to rent. This might be acceptable if the rate of taxation is progressive and with a modestly set starting rate, but this is a factor not explored by the survey. Nor is how a wealth tax would be balanced against national insurance and taxes on income and consumption.
You would be surprised at who reads the FT!….. and I did not even vote.
Whilst this is not the right time for tax rises it IS the time to talk about wealth taxes. First, it will be a long discussion; second, the importance or the role of the State (and therefore, tax) is being reassessed by ordinary people.
As a general principle, I think all wealth should be included with thresholds set high. I am not sure that the state should be encouraging (say) investment in a large main residence over bond and share holdings that provide capital for business.
Clearly, the scope of a wealth tax would have a big impact on relative asset values; high value properties might take a really big hit. However, if the cap is set high enough the “losers” will be few in number and will be sufficiently wealthy to take the hit.
Once the principles of a wealth tax are established rates/thresholds can be moved and details tweaked. Major tax change is a long game.
I agree with that last point
“Council tax reform was also discussed:
Around 45 per cent of respondents said they were definitely or probably against reforming the valuations to raise more tax and 41 per cent said they would definitely or probably back a revaluation.”
Surely it is time to get the term “Council Tax” changed? These payments do raise revenue to pay for local services, don’t they? The councils cannot “print money” so the councils are constrained in the same way as our own households are.
How about “Council Services Levy”?