Latest news with #LordKinnock
Times
13-07-2025
- Business
- Times
A wealth tax looks seductive to Labour but must be resisted
Anyone switching on the radio yesterday will have heard Sharon Graham of the Unite union complaining bitterly about the failure of the government to adequately compensate her members in Birmingham, rejecting any suggestion that the state simply cannot afford her demands. Graham supports the increasingly fashionable idea of a 'wealth tax', as does Lord Kinnock, Labour's leader from 1983 to 1992, who popped up last week to suggest a 2 per cent levy on people with assets valued at more than £10 million, which would raise as much as £11 billion a year. He said it would 'secure resources' and allow Labour to declare that 'we are the government of equity'. It must be hoped that Kinnock was freelancing rather than flying a kite on behalf of a cabinet member. Labour's left has been emboldened by Sir Keir Starmer's U-turns on more than £6 billion of winter fuel and welfare cuts. The reversals, combined with possible productivity downgrades from the independent fiscal watchdog, could leave Rachel Reeves scrambling to fill a £20 billion hole by autumn. Angela Rayner, the deputy prime minister, proposed up to £4 billion of extra taxes on high-earners and the wealthy before the spring statement. Starmer's spokesman refused to rule out a wealth tax when questioned last week, although Reeves is known to oppose it. Labour, which still bears the scars of Kinnock's defeat in 1992, put itself in a straitjacket by promising not to raise taxes on 'working people' before last year's election. Starmer and Reeves were entitled to point out that the Conservatives left a dreadful fiscal legacy, having splurged during Covid and allowed borrowing to balloon. But it was Labour's pre-election pledge that guided the chancellor's decision to soak business in the October budget. That loaded £25 billion on to employers' national insurance contributions, imposed inheritance tax on farms and family-owned companies and increased taxes on capital gains and carried interest. It was also the chancellor who toughened up the Conservatives' measures on non-doms by making all their global assets liable for UK inheritance tax after 10 years. • Emma Duncan: It's a bit rich Labour raising taxes on this lot Labour's first budget has already sapped animal spirits. Although numbers are difficult to check and are often produced by vested interests — Henley and Partners, a relocation specialist, claims the UK will lose a net 16,500 dollar millionaires this year — anecdotal evidence, plus a newfound vibrancy in rival domiciles such as Italy, suggests the non-dom reforms in particular may be causing an exodus of the wealthy. The Labour left prefers not to confront fiscal reality, committed to high taxation and redistribution. But make no mistake: a wealth tax, on top of last autumn's harsh medicine, would be arsenic for the UK's economy. In considering a new tax, it pays to look at past examples. According to the Organisation for Economic Co-operation and Development, 12 countries had wealth taxes in 1990. Just four still levied them by 2017. Spain introduced a wealth tax in 2022, broadly payable on assets over €2 million for a couple, which brought in €632 million in 2023 — 0.25 per cent of the government's total tax revenue for that year. The equivalent yield in the UK would be £2 billion, less than a third of the savings forgone by the Labour leadership in its recent U-turns on winter fuel payments and welfare. Wealth taxes are not just economically harmful but burdensome to administer. The rich are more mobile than ever, so the biggest fish rarely get caught. Refusing to exempt assets such as principal residences amounts to political suicide, but exemptions bring complications and opportunities for avoidance. A 'flash' wealth tax carried out once, without warning, would capture more revenue. But it would also destroy confidence in the rule of law. It is also worth remembering that the top 1 per cent of earners in the UK contribute almost 30 per cent of income tax revenue. The top 10 per cent stump up about 60 per cent of it. • Why a wealth tax won't work Starmer's failure to convince many of his backbenchers of the need for fiscal discipline has left the government caught between a rock and a hard place. Cuts to the welfare bill, although politically toxic, are still needed. Ministers will have to remake the argument but are unlikely to do so before the autumn budget. Reeves will inevitably look at a variety of stealth measures to try to square the tax-and-spend circle. But she should avoid a wealth tax that would accelerate the flight of entrepreneurs. The rich may appear to pay the price at first, but it is Labour's 'working people' who will eventually pick up the bill.
Telegraph
09-07-2025
- Business
- Telegraph
Labour is driving wealth out of Britain, not taxing it
Sir Keir Starmer told MPs today that no Prime Minister would ever seek to second-guess the Budget by ruling out any specific fiscal measures. He was pressed by Kemi Badenoch, the Conservative leader, to state unequivocally that there would not be a wealth tax under Labour. Sir Keir declined to do so, citing precedence and convention. Yet that has not stopped him ruling out increases in income tax rates, VAT and employee National Insurance. Such is the exodus from Britain of wealthy individuals that this continued uncertainty will cause further damage and make the Government's search for economic growth even harder to achieve. Already around 16,000 wealthy people have already left the country taking their money with them as a result of decisions taken since Labour came to power, including changes to non-dom rules. At the weekend Lord Kinnock, the former Labour leader, said that the Chancellor should introduce a two per cent levy on assets above £10m, something he claimed would raise upwards of £10bn a year and show the party's commitment to 'equity'. It would also show its economic illiteracy since all the evidence from around the world shows that wealth taxes do not work and end up costing considerably more to administer than they raise in revenue. The danger is that in order to bring recalcitrant MPs into line after their revolt over welfare reforms Sir Keir will be tempted to reach for an old-style, Seventies-style Socialist measure. The real reason the Prime Minister refused to rule out a wealth tax is because he is keeping the option open, however harmful it may prove to be.
Sky News
09-07-2025
- Business
- Sky News
What is a wealth tax, how would it work in the UK and where else has one?
The idea of a wealth tax has raised its head - yet again - as the government attempts to balance its books. Downing Street refused to rule out a wealth tax after former Labour leader Lord Kinnock told Sky News he thinks the government should introduce one. 2:19 Sir Keir Starmer's spokesman said: "The prime minister has repeatedly said those with the broadest shoulders should carry the largest burden." While there has never been a wealth tax in the UK, the notion was raised under Rishi Sunak after the COVID years - and rejected - and both Harold Wilson's and James Callaghan's Labour governments in the 1970s seriously considered implementing one. Sky News looks at what a wealth tax is, how it could work in the UK, and which countries already have one. What is a wealth tax? A wealth tax is aimed at reducing economic inequality to redistribute wealth and to raise revenue. It is a direct levy on all, or most of, an individual's, household's or business's total net wealth, rather than their income. The tax typically includes the total market value of assets, including savings, investments, property and other forms of wealth - minus a person's debts. Unlike capital gains tax, which is paid when an asset is sold at a profit, a wealth tax is normally an annual charge based on the value of assets owned, even if they are not sold. A one-off wealth tax, often used after major crises, could also be an option to raise a substantial amount of revenue in one go. 1:51 How could it work in the UK? Advocates of a UK wealth tax, including Lord Kinnock, have proposed an annual 2% tax on wealth above £10m. Wealth tax campaign group Tax Justice UK has calculated this would affect about 20,000 people - fewer than 0.04% of the population - and raise £24bn a year. Because of how few people would pay it, Tax Justice says that would make it easy for HMRC to collect the tax. The group proposes people self-declare asset values, backed up by a compliance team at HMRC who could have a register of assets. Which countries have or have had a wealth tax? In 1990, 12 OECD (Organisation for Economic Co-operation and Development) countries had a net wealth tax, but just four have one now: Colombia, Norway, Spain and Switzerland. France and Italy levy wealth taxes on selected assets. Colombia Since 2023, residents in the South American country are subject to tax on their worldwide wealth, but can exclude the value of their household up to 509m pesos (£92,500). The tax is progressive, ranging from a 0.5% rate to 1.5% for the most wealthy until next year, then 1% for the wealthiest from 2027. There is a 0.525% municipal wealth tax for individuals with net wealth exceeding 1.7m kroner (about £125,000) or 3.52m kroner (£256,000) for spouses. Norway also has a state wealth tax of 0.475% based on assets exceeding a net capital tax basis of 1.7m kroner (£125,000) or 3.52m kroner (£256,000) for spouses, and 0.575% for net wealth in excess of 20.7m kroner (£1.5m). The maximum combined wealth tax rate is 1.1%. The Norwegian Labour coalition government also increased dividend tax to 20% in 2023, and with the wealth tax, it prompted about 80 affluent business owners, with an estimated net worth of £40bn, to leave Norway. Spain Residents in Spain have to pay a progressive wealth tax on worldwide assets, with a €700,000 (£600,000) tax free allowance per person in most areas and homes up to €300,000 (£250,000) tax exempt. The progressive rate goes from 0.2% for taxable income for assets of €167,129 (£144,000) up to 3.5% for taxable income of €10.6m (£9.146m) and above. It has been reported that more than 12,000 multimillionaires have left Spain since the government introduced the higher levy at the end of 2022. Switzerland All of the country's cantons (districts) have a net wealth tax based on a person's taxable net worth - different to total net worth. It takes into account the balance of an individual's worldwide gross assets, including bank account balances, bonds, shares, life insurances, cars, boats, properties, paintings, jewellery - minus debts. Switzerland also works on a progressive rate, ranging from 0.3% to 0.5%, with a relatively low starting point at which people are taxed on their wealth, such as 50,000 CHF (£46,200) in several cantons.
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The Independent
08-07-2025
- Business
- The Independent
Readers torn on wealth tax – from ‘the only counterbalance' to ‘utterly counter-productive'
Chris Blackhurst's claim that Britain 'simply can't afford' a wealth tax has sparked fierce debate among Independent readers, who were deeply split over whether taxing extreme wealth is fair, workable, or economically sensible. Many backed Lord Kinnock's call for what one commenter dubbed an 'obscene wealth tax', arguing that while wages have stagnated, asset values have skyrocketed. They claimed that taxing the ultra-wealthy is the only way to rebalance a system rigged in favour of those who make more money from owning than working. Several called for a land value tax too, insisting it's fairer, harder to dodge, and long overdue. Others weren't convinced, with some questioning the practicality of taxing wealth, especially when it's tied up in private businesses or property. One pointed out: 'How do you tax the value of something that can't be easily sold?' Another warned that entrepreneurs would simply leave the country, taking jobs and investment with them. There were strong words for Labour, with accusations that the party is chasing populism over sound economics. But just as many readers argued that the real risk is doing nothing – letting inequality grow while public services crumble. Here's what you had to say: Obscene wealth tax It's not a wealth tax we need. It's an obscene wealth tax. When simply having money can make more money than earning it can, and a class of super-rich see no shame in possessing such grotesque amounts of wealth, an obscene wealth tax is the only possible counterbalance to the inevitable concentration of money in the hands of an ever-shrinking number that capitalism enforces. It may not work. But we have to try. HeHeHitThatTooWellClive Land value tax The government should urgently look at resurrecting an idea that nearly became law a hundred years ago – a land value tax. There is so much money tied up in property and, by definition, land that it would be perverse not to tax it. Rich individuals purchase land as a means of evading taxes, and some landowners have managed to avoid paying taxes for centuries by owning their land through trusts. Tax it. The land cannot be taken abroad, and it's a tax that cannot be avoided, irrespective of 'who or what entity owns it'. You don't tax any property itself, you tax the value of the land it sits on. Closing this loophole would raise billions. flying scot Do you think the UK should introduce a wealth tax on the super-rich to help fund public services? Share your views in the comments. Socialism exists only for the rich I get that large salaries attract the best people for certain positions, but that's not the problem. The problem is that the top 1 per cent of rich people hold more wealth than the bottom 50 per cent. The gap between the very wealthy and the working class is massive and is only getting wider. It wasn't that long ago when one decent working-class wage could buy a house, a car, and still manage to bring up a couple of kids. Socialism only exists for the rich, while the working classes, people with disabilities, and now kids with disabilities are being targeted to raise more money. Plasticpaddy How do you value a private business? The vast majority of people in the UK with personal wealth over £10 million are entrepreneurs or business founders, and almost all of their wealth is in the form of shares in their business. These businesses will mostly be privately held, so there is no market-based price discovery mechanism available to value them. So, to make this work, the government would, on an annual basis, have to accurately estimate the value of every privately owned business in the UK. They would be backed up in court for decades with appeals, because the value of a business ultimately is 'what someone else is prepared to pay for it'. There is no universally agreed-upon formula. But long before this became a problem, every single high-net-worth business owner would have re-domiciled their business overseas and left the country for good, taking all the jobs with them, most likely. sj99 Millionaires remove money from the economy Money spent on winter fuel allowance, teacher wages, and special needs support stays in the economy because it cannot be saved. Wealth accruing to millionaire CEOs leaves the economy, usually via tax-efficient schemes in foreign jurisdictions. Millionaires and billionaires remove money from our economy because they don't live paycheque to paycheque. RodyaRaskolnikov High salaries create tax, not trickle down Lord Kinnock is certainly right about one thing: a wealth tax will be highly popular among voters. Taking money off those rich so-and-so's and giving some to me – what's not to like? What its proponents don't understand is that high salaries attract high taxes, and the Treasury is no doubt grateful. But they don't have any significant multiplier effect. Whereas companies set up by rich people (or who have become rich due to the value of those companies) employ workers who pay income tax and NI, generate pensions for retirees, produce goods and services which attract VAT, make profits which incur corporation tax and pay dividends on which dividend taxes are paid. So there is a large tax multiplier function. Impeding that process is not a good idea. OldContemptible Gentrification doesn't make you rich The problem is: how do you define wealth? I am working class and I live in a house in a once down-market neighbourhood that has been gentrified. It's worth considerably more than I paid for it 50 years ago. It's an asset that could attract a wealth tax. But I'm a pensioner on limited means, and there is no way I could afford 10 per cent or even 1 per cent of the value of my asset in a wealth tax every year. I could move, but stamp duty and other costs make that unappealing – assuming I could find a suitable property for an ageing couple. How's that fair? EnglishCastle Who are the real wealth creators? Well, the country has the choice of keeping a regressive tax system and declining public services, or doing something about it. I see no reason at all why capital gains tax should not be the same rate as income. Why does this country allow the curious ransom-like threat of the wealthy leaving to dominate fiscal policy? Who are the real wealth creators? Those who do the work, of course. Land value tax is another possibility. They can't take their land and house abroad. International cooperation would be a big help, of course, so that low-tax regimes cease to exist. Regardless, wealth distribution has become acutely unequal in recent decades. If nothing is done, the economy will decay, as we're already seeing. The rich will always gripe and offer special pleading. Those who are not rich yet back regressive taxation, are cutting their own throats. Poulter Top bosses won't flee for losing £1m A good part of the collapse in Labour's support is that they are intent on avoiding any meaningful tax increases for the rich, while penalising the disabled and others at the bottom of the wealth scale. It's no doubt a complex issue, but a couple of things strike me: 1. Are we to believe that if the income of a top boss drops, as a result of extra tax, from say £3m a year to £2m, it will become impossible to find someone competent to do the job at the lower rate (assuming the first scarpers off abroad)? 2. Does the argument that we have to pay top rates to get the best talent bear any scrutiny? E.g. the main skill demonstrated by water company bosses seems to lie in accruing as much wealth for themselves, with the lowest benefit to anyone else. Is that what we're paying top rates for? It's funny how the same argument somehow never gets used for people who actually do something useful, like care workers. Eadwine Wealth doesn't trickle down Unfortunately, this is based purely and simply on the belief that wealth trickles down, which is largely untrue. And the 'wealth' does not benefit the country – it is spent and invested elsewhere. A tax based simply on land ownership and usage, easy to verify by drone or satellite and with clear ownership recorded by the Land Registry, resolves that, and might also put an end to leaseholds... To suggest that millionaires and billionaires should contribute more, and that all working people be paid a minimum of the living wage, and those unable to work full time be topped up from taxation on those able to pay, should not be contentious. Topsham1 Popular, but counter-productive As Colbert said more than 300 years ago: "The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest amount of hissing." With a wealth tax, a government gets neither feathers nor hissing, as the rich simply leave the country for more welcoming shores. The idea is popular, but also utterly counter-productive. paul The rich pay the tax already So many lefties think that they are paying too much tax and that, instead, the government should soak the rich. The reality is that the vast majority of people in the UK are net recipients. The top 10 per cent of earners pay nearly 60 per cent of tax, and the tax rate in the UK is one of the lowest in Western Europe. If you want decent services, pay for them. YetAnotherName When does wealth creation become a problem? When someone starts and grows a business, they risk their savings and even their house. They work long hours and only make a profit and grow the business if they provide the goods and services that people want to buy. They also create jobs that would otherwise not exist and pay taxes that would otherwise not be paid. At what point does any of this wealth generation become a problem? Mark
Telegraph
08-07-2025
- Business
- Telegraph
Revealed: The five forms of wealth tax Rachel Reeves backed
Rachel Reeves showed her support for five forms of wealth tax during her time as a backbench Labour MP, The Telegraph can disclose. In 2018, the Chancellor backed a number of new levies in a pamphlet called The Everyday Economy. It was published by Ms Reeves when she was chairing the Commons business committee. In it, she said the government could revise council tax bands, replace council tax with property tax, raise and reform inheritance tax, impose a land tax, and bring capital gains tax in line with income tax. On Tuesday, the Treasury failed to deny that measures in the document could be introduced in the Budget this autumn as ministers seek to fill a £5 billion black hole after their about-turn on welfare cuts. It will add to further speculation that Labour may introduce some form of wealth tax after Lord Kinnock, a former leader of the party, said ministers were 'willing to consider' a levy on assets of over £10 million. Dale Vince, one of Labour's biggest donors who has given more than £5 million to the party, also urged Ms Reeves to introduce a wealth tax on Tuesday. Mr Vince told The Telegraph: 'We do need to cut welfare – welfare for the rich. Tax breaks, allowances, loopholes, there's an abundance of them. And it results in people with money paying half the rate of tax of people with a job. 'It's right that those with the deepest pockets, who've taken the most from our economy, pay their fair share. It's why calls are growing for a wealth tax. It's about fairness. 'We tax money made with money at half the rate of money made with a pair of hands – it's just not right. Our tax code was written by people with money for people with money. It needs to serve us all.' Here, The Telegraph examines the five types of wealth tax for which Ms Reeves signalled her backing in 2018. 'Revising' council tax bands Ms Reeves called for 'a radical overhaul of the tax system because our current system of wealth taxation isn't working'. She said wealth inequality in the UK was almost twice as deep as income inequality, going on to state that half of all wealth in Britain was 'owned by just 10 per cent of adults'. Replacing council tax with a property tax Ms Reeves went on to suggest council tax could be replaced altogether with a property tax, arguing that this would be 'more equitable'. Raising and reforming inheritance tax The Labour Government has already made changes to inheritance tax through reform of agricultural property relief, which was dubbed as a 'family farm tax' by critics. In 2018, Ms Reeves suggested that more sweeping changes were required in an attempt to tackle inequality. Land tax Ms Reeves also suggested the introduction of a land tax, which some economists on the Left have argued should replace council tax. The move would largely hit the very wealthiest Britons. Equalising capital gains tax and income tax There has long been speculation that Labour could equalise capital gains tax, which is charged at 24 per cent, and income tax, which has a top rate of 45 per cent. This idea would strike a further blow to wealthy savers and it was also endorsed by Ms Reeves in 2018. She said: 'Taxing the savings and investment income of higher rate taxpayers can be increased.' Ms Reeves will find herself in the difficult position of having to balance the books in the autumn after major U-turns on the winter fuel payment and reforms to the welfare system. The climbdowns are estimated to cost about £6 billion, and Lord Kinnock's intervention has reignited the wealth tax debate despite the Chancellor insisting in April that no such policy would be introduced. Despite pointing back to her words, Downing Street, the Treasury and several Government ministers have all refused to explicitly repeat the pledge not to introduce a wealth tax. A Treasury spokesman said: 'Tax decisions are taken at the Budget and, as you would expect, we are not going to comment on tax speculation. We have made our manifesto promises to protect working people and we took the decision last autumn to deliver the change the British people voted for.'
