Britain already has a de facto wealth tax
There are few prizes on offer for guessing where the minds of Labour MPs will turn. Yet between inheritance tax, council tax, stamp duty, capital gains, corporation tax, and the tax on interest, there is scarcely an element of an individual's portfolio which isn't in some way squeezed to fund the ever-expanding welfare state.
An additional 120,000 people are predicted by HMRC to pay income tax on the interest on their savings this year, bringing the total number paying to 2.64 million. Some of this is due to higher returns; another component, however, is down to the freeze in tax thresholds, driving down the inflation adjusted value of the tax-free limit.
Britain is not a country blessed with an excessive level of private savings and with the Government actively attempting to boost investment, it might be thought that penalising one of the channels through which funds can be lent to firms would be discouraged. Such analysis, however, reckons without the obsessive equalising instinct which has taken root in Westminster.
With the Government apparently fixated on the curious objective of divorcing living standards from economic contributions entirely, the need for tax revenue today is taking precedence over the need to provide for tomorrow.
The result of this short-sighted creation of a hostile environment for wealth will surely be to further undermine the sustainability of the public finances in the long run.
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