Latest news with #StuartAdam
Telegraph
08-07-2025
- Business
- Telegraph
Wealth tax will penalise savers, Labour warned
A wealth tax would punish savers and hit the middle class, the Government has been warned by the Institute for Fiscal Studies (IFS). Introducing a levy on the assets of the rich would not be 'sensible', the IFS said, in a rebuff to Labour backbenchers. Taxing the same wealth each year would 'penalise' people for saving and making investments, leaving the country poorer in the long run. It would also likely hit the middle classes once property and pension wealth are factored in, the think tank warned. 'It is difficult to make the case that an annual tax on wealth would be a sensible part of the tax system even in principle,' said Stuart Adam, a senior economist at IFS. No 10 repeatedly refused to rule out introducing a new levy on wealthy taxpayers on Monday after Lord Kinnock, the former Labour leader, said the party was 'willing to explore' the idea. Some of Labour's biggest union paymasters have also called for the Government to introduce a 2pc tax on people's assets above £10m. A YouGov poll published on Tuesday found 75pc of the public supported the idea of a tax of 2pc on wealth above £10m. But the IFS cautioned that a range of countries had previously introduced a wealth tax but ultimately abandoned the policy, including Sweden, Finland and Luxembourg. 'International experience of annual wealth taxes is not encouraging,' Mr Adam said. 'There are strong reasons to radically reform how we currently tax the sources and uses of wealth; this includes reforming capital income taxes in order to properly tax high returns. An annual wealth tax would be a poor substitute for doing that.' 'Less attractive place to live' In a 2021 paper, the IFS concluded there were 'economically superior' ways of targeting the assets of the wealthy, including reforming capital gains tax. A new wealth levy would lead to a raid on Britain's middle class, the IFS warned. Mr Adam said: 'An annual wealth tax would need to apply broadly to all assets to ensure that it was not easy to avoid. Such a tax could raise significant revenue if it applied to the bulk of the UK's wealth – that would include the homes and pensions of the middle class.' The influential think tank also cautioned that trying to raise large amounts of revenue from only the very wealthy would make the country 'a less attractive place for those people to live'. The comments add to warnings from business chiefs that a new levy would drive people abroad and trigger a fresh exodus of the rich from Britain. Many wealthy residents are already moving abroad after Rachel Reeves scrapped non-dom status and introduced inheritance tax on overseas trusts earlier this year. Hotelier Sir Rocco Forte told The Telegraph earlier this week: 'Labour has already seen a huge exodus of wealthy people which is ongoing, with many more due to leave before the Budget. A wealth tax will further exacerbate the problem.' Growing Labour unrest Pressure to consider a wealth tax has been mounting after a series of costly U-turns by the Government that have left the Chancellor scrambling to find billions of pounds. Cabinet ministers have been told that the Chancellor will have to raise taxes in her autumn Budget. Last week's rebellion over the welfare cuts package has forced the Treasury to find new savings and emboldened hard-Left Labour backbenchers to push for more policy changes. 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.'
The Independent
08-07-2025
- Business
- The Independent
Why experts think a UK wealth tax is ‘naive'
Experts caution that a wealth tax to address the UK's public finance deficit would be "naive" and largely ineffective, citing a lack of success stories internationally. Leading tax lawyer Dan Neidle suggests a wealth tax could detrimentally affect the UK's overall tax revenue, arguing it is arrogant to assume the UK could succeed where other nations have failed. Economists highlight the significant practical challenges of implementing a wealth tax, including complex asset valuation, high administrative costs, and potential liquidity issues for taxpayers. IFS economist Stuart Adam said most developed countries have abandoned annual wealth taxes, with experts advocating for alternative reforms to capital income taxes as more realistic. Concerns exist that a wealth tax might prompt wealthy individuals to reallocate assets or alter their residency status, potentially leading to a net loss for the Treasury rather than increased revenue.
The Independent
27-05-2025
- Business
- The Independent
Farage's pledges to slash taxes don't add up, top economists warn
Nigel Farage 's promise to slash taxes if he wins the next general election does not add up, Britain's top economic think tank has warned. The Reform UK leader on Tuesday touted plans to hike the threshold for paying income tax and restore winter fuel payments for pensioners as he declared the party as the 'true party of workers'. But, just hours after the arch-Brexiteer's speech, the (IFS) said his plans would cost tens of billions of pounds and he had failed to say how they would be funded. Senior economist Stuart Adam told the BBC's World at One programme that Reform's plans to hike the income tax threshold from £12,500 to £20,000 'dwarfed' his other announcements, which included getting rid of the two-child benefit cap and the full restoration of winter fuel payments. He said the tax threshold plan would cost between £50bn and £80bn and warned that 'if they're going to be a party of government, they would have to make those numbers add up'. Mr Adam said: 'Those are all significant things, and they are high-profile new public announcements, but actually, they are all still dwarfed by some of the big policies that were in the manifesto last year, and today Nigel Farage recommitted to increasing the income tax allowance to £20,000, which depending on details might cost £50billion, £60 billion, £70 billion, £80 billion, relative to other policies where we might be talking £1 billion, £2 billion, £3 billion each. 'So the big story is still those very big tax cuts and how they would ultimately be paid for." He added that the announcements by Mr Farage this morning were much smaller than last year's "very radical" manifesto published by Reform UK for the general election. "As it stands, I don't think they have really set out how they would pay for such big giveaways," Mr Adam said. "Of course, they don't have to do that yet, we're not yet at a general election. But at some point, if they're going to be a party of government, they would have to make those numbers add up." Asked on Tuesday how his plans would be paid for, Mr Farage promised Reform would save money by slashing the net-zero agenda and cutting the bill to house asylum seekers in hotels and elsewhere. Together, the measures would save up to £50bn per year, he claimed. Mr Farage added that Reform could save £7bn per year by cutting the amount spent on arms-length government bodies, or quangos, if it won the next election. Overall, Mr Farage said the plans would save £350bn over the course of a parliament. He added: 'You can argue about numbers adding up, you can probably argue that at no point in the history of any form of government has anybody ever thought the numbers added up. 'We take a fresh approach to everything. I think what I've done today is to give you an idea of the direction of policy, of priorities, of what we think is important, what we think it is going to cost and how we think we're going to pay for it. 'I don't think anybody at this stage, with a general election some years away, could frankly do more than that. And I believe what I have presented today is credible.' Labour attacked Mr Farage's 'fantasy promises' and compared the Reform leader to Liz Truss, warning that he would devastate the finances of families across Britain. Labour chair Ellie Reeves said: 'Those families don't need to be told what the consequences would be of this nonsense. They live through it every month through the higher mortgages, higher rents, higher prices, and higher bills inflicted upon them by the last government.' She insisted Labour is delivering in government, warning that 'all Reform offer is a return to the chaos of Liz Truss'.
