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Research conducted by Labour MP Jon Trickett has found that a small tax on the hoarded wealth of the country’s very richest people could raise almost £100bn every single year – or a staggering £490bn over the next five years – in order to properly fund public services and fix the holes in our broken system.
The new report, titled The Nature of Wealth in Britain, claims that the current system of only taxing income, whilst ignoring unproductive wealth, means the public purse is missing out on a vast quantity of much-needed and readily available funds.
The extra investment enabled by such a tax could be so vast that it could potentially grow the economy by a staggering £220bn a year, the report claims.
In addition, the extra revenue raised by such a tax – even on conservative estimates – would be enough to give NHS staff a proper pay rise and reverse the recent £20 a week Universal Credit cuts, and still leave the public purse £85bn spare every single year.
The report says that such a tax is desperately needed because of soaring inequality between the very richest and everybody else – pointing to the fact that the hardship created by the pandemic has only really impacted ordinary people, whilst the richest 250 individuals have managed to increase their wealth by a staggering £106bn over the same period.
Trickett’s report proposes four separate options for a Wealth Tax:
Option 1: As recommended by the Wealth Tax Commission, a one-off Wealth Tax to raise £260bn over five years.
For this tax, the Commission claims:
“A well-designed one-off wealth tax would raise a total of £260 billion at a rate of 5% over £500,000 per individual or £80 billion at a rate of 5% over £2 million per individual, payable at 1% per year over five years. These estimates account for all relevant behavioural responses and administrative costs to government.”
Option 2: A one-off tax on wealth over £2m, raising a total £197.6bn.
This tax would be graduated on wealth:
- £2-5 million – 8%
- £5-10 million – 12%
- £10+ million – 15%
Option 3: A yearly tax on wealth over £2m, raising £112bn over five years.
This tax would also be graduated on wealth:
- £2-5 million – 1%
- £5-10 million – 1.5%
- £10+ million – 2%
Option 4: A hybrid Wealth Tax combining Option 2, plus an annual tax on wealth gained after the tax is applied – raising approximately £304bn over five years.
In addition to a Wealth Tax, the report also recommends improvements to the current tax system that would raise extra funds on top.
Bringing Capital Gains Tax and dividends into line with income tax could potentially raise £127bn over five years, whilst closing tax loopholes and tackling tax evasion could add an additional £145bn to the total over the same period, the paper states.
Moreover, Trickett’s report is keen to stress that only the very wealthiest individuals, who can afford to do so, would have to cough up – whilst the working class would be left totally untouched – stating:
“Indeed, the aim of this report is to show that it is the wealthy who should be contributing more, not workers. The latter are already taxed at a much higher rate, and we expect to only tax the wealth of a small number of people in the top 1%.”
In total, by implementing all of the measures in the report, a conservative median estimate would see £98.18bn extra raised every year in order to fund policies to grow the economy and fix the gaping holes in our system, such as:
- A 15% NHS pay increase (£5.1bn nominal cost)
- Making the £20 a week Universal Credit uplift permanent (£6bn)
- Plug the Social Care funding gap (£4.3bn)
- Local Council funding gap (£7.4bn)
- Reverse education funding cuts (£7bn)
- Insulating all homes, reducing energy bills and cutting carbon emissions by 10% through “Warm Homes for All” (£250bn)
- Building 150,000 houses a year (£75bn)
However, despite the massive amount of money that could be raised through such measures, the Tories have taken a completely different approach – forcing the least well off to pick up the tab through National Insurance increases and a devastating £1,000 a year cut to Universal Credit.
And, just to add insult to injury, it was revealed last night that in the upcoming Autumn budget, the Chancellor Rishi Sunak is actually planning to cut taxes on banks – saving them around £1.5bn a year – all whilst ordinary hardworking people are finding it harder and harder just to afford to essentials.
The economy is all about priorities – and the Tories have, time and time again, made theirs abundantly clear.