Latest news with #assettax
Yahoo
06-07-2025
- Business
- Yahoo
Which European countries have a wealth tax - and does it work?
As Sir Keir Starmer marks a year in Downing Street, a former Labour leader has suggested the prime minister should consider "asset taxes" for the wealthy as a way to regain support. Lord Neil Kinnock said that while the government is working towards "a series of really commendable and absolutely essential policies", they are "barely noticed" amid fury over cuts to the winter fuel payment, controversial welfare reforms and continuing with the two-child benefit cap. He said that a "cloud hangs over the accomplishments of the government... and people are not getting the message", with Labour trailing in the polls to Nigel Farage and Reform UK. Kinnock told Sky News' Sunday Morning With Trevor Phillips programme that there are things the party could do that "would commend themselves to the great majority of the general public", including "asset taxes". "By going for an imposition of 2% on asset values above £10 million, say, which is a very big fortune, the government would be in a position to collect £10 billion or £11 billion," he said. Conservative shadow chancellor Sir Mel Stride said he thought a wealth tax would be "the worst thing to do" and opposed the idea of "piling further taxes on the wealth creators". One common argument against wealth taxes is that they drive wealthy people to other countries, meaning less tax collected, but how true is this? Here, Yahoo News takes a look at other countries in Europe with forms of a wealth tax to see what the impact has been. Norway has a net wealth tax, which is defined by American non-profit the Tax Foundation as "taxes on an individual's or family's net assets levied on an annual basis". In 2023, the Guardian reported that a record number of super-rich Norwegians were leaving the country after the maximum wealth tax was increased to 1.1%. Ole Gjems-Onstad, a professor emeritus at the Norwegian Business School, told the newspaper he estimated that those who left the country had a combined fortune of at least NOK 600bn (£43.6bn). In 2025, Alex Recouso, co-founder and chief executive of CitizenX, a private platform helping people find and fund places that will accept them as citizens, put the number at around £39.5bn. He told Australia's Daily Telegraph that this had resulted in a lost £435 million in yearly wealth tax revenue. Norway's municipal wealth tax rate is 0.525% and is calculated based on global assets exceeding a net threshold of NOK 1,760,000 (around £128,000) for single/not married taxpayers and NOK 3,520,000 (around £256,000) for spouses, according to PwC. The state wealth tax rate is 0.475% and is calculated based on assets exceeding a net capital tax basis of NOK 1,760,000 (around £128,035) for single/not married taxpayers and NOK 3,520,000 (around £256,000) for spouses. For net wealth in excess of NOK 20,700,000 (around £1.5 million), the rate is 0.575%. These levies combined brings the maximum wealth tax rate to 1.1%. While many rich Norwegians were reported to have moved to Switzerland, the Alpine country has a wealth tax system of its own. Its tax is levied annually at a regional level and accounts for around 3.8% of the state's annual income, according to the Financial Times. However, the newspaper points out that on the whole, tax in Switzerland is low, varying from canton-to-canton, with the top federal rate at just 11.5%. There is also no inheritance tax at a federal level, although some cantons have their own. This could explain why Switzerland has not had the same exodus of the super-rich as Norway. Spain taxes its residents on its worldwide assets valued at over €700,000 (around £604,000), according to Sublime Spain, a company that helps support people's work and life in the Mediterranean country. However, some autonomous regions including Catalonia have a lower level of €500,000, while some don't have any wealth tax. Percentages vary depending on how much you have in assets, but generally, the wealth tax in Spain is between 0.2% and 2.5%. Spain's central government also introduced a nationwide "solidarity wealth tax" in recent years, ranging from 1.7% to 3.5% on people with net assets exceeding €3 million (around £2.6 million). The Tax Justice Network, a British advocacy group, holds up Spain as a shining example of how wealth taxes can work. It suggests that other countries can raise $2.1 trillion a year by following the example of Spain's "featherlight" wealth tax on the richest 0.5% of households. Using the Spanish structure as a model for its study, the group suggests a tax rate of 1.7% is applied on wealth above the 0.5% threshold; a rate of 2.1% is applied wealth above the 0.1% threshold; and a rate of 3.5% is applied to wealth above the 0.05% threshold. But how well has Spain's wealth tax worked? A review by the Tax Foundation found that in 2022, wealth taxes represented 0.19% of GDP in Spain, compared to 1.19% of Switzerland's. They accounted for 0.51% of the former's total tax revenues and 4.35% of the latter's. In 2023, the new solidarity tax was reported to have raised €632 million in the year, the Budget Ministry said, compared to €1.8 billion raised from all taxes on large fortunes. While these figures are not to be sniffed at, they are a small proportion of the £280.5 billion in total tax revenue raised by Spain that year, according to Ceic Data. Raise taxes or this government will fail, Rachel Reeves's former top adviser warns (The Independent) Another tantrum from the Labour backbenches is inevitable (Sky News) Starmer endorses UN's high-tax manifesto (The Telegraph)
Telegraph
06-07-2025
- Business
- Telegraph
Lord Kinnock urges Reeves to bring in wealth tax
Lord Kinnock has urged Rachel Reeves to bring in a wealth tax at the autumn Budget. The former Labour leader called for a 2 per cent levy on assets of more than £10 million and suggested ministers would be 'willing' to explore the idea. It comes after Sir Keir Starmer wiped out £5 billion in savings by watering down his welfare reforms in the face of a major Labour rebellion. Lord Kinnock, the Labour leader from 1983 to 1992, said the fiscal rules and tax pledges drawn up by Ms Reeves gave the appearance that the Government was 'bogged down by their own imposed limitations'. He told Sky's Sunday Morning with Trevor Phillips: 'There are ways around that, ways out of it, pathways that I think people are willing to explore and actually would commend themselves to the great majority of the general public. 'They include, for instance, asset taxes in a period in which for the last 20 years in the United Kingdom like quite a lot of western economies, earned incomes have stagnated in real terms while asset values have zoomed, they've just gone through the roof and they've been barely touched.' Lord Kinnock added: 'You wouldn't have to touch assets of under £6 million or £7 million, so people's houses would be secure, obviously. But even going for an imposition of two per cent on asset values above £10 million, say, which is very big fortune, the Government would be in a position to collect £10 billion or £11 billion a year. 'Now that's not going to pay all your bills, but it does two things [...] One is to secure resources, which is very important, revenues, but the second thing it does is say to the country, 'we are the government of equity'.' Many European countries to introduce wealth taxes have ended up repealing the levies owing to an exodus of top commercial talent and high administrative costs in return for little revenue. But Lord Kinnock insisted such a policy would make a 'substantial difference' to the economy. 'This is a country that is very substantially fed up with the fact with whatever happens in the world, whatever happens in the UK, the same interests come out on top unscathed, all the time, while everybody else is paying more for gutted services,' he said. The UK is expected to lose more millionaires than any other country this year after Ms Reeves launched a wide-ranging tax raid on taking power, which included abolishing the non-dom status. About 16,500 millionaires are predicted to quit Britain in 2025, up from 10,800 last year. Lord Kinnock also warned Labour's 'commendable and absolutely essential' policy programme had been 'barely noticed' by voters because of major about-turns on welfare and the winter fuel allowance. Bridget Phillipson, the Education Secretary, admitted on Sunday that there was still 'frustration' among voters who supported Labour in the hope of seeing change. Ms Phillipson told Sky: 'Whilst I do think we've achieved a lot in that first year there have undoubtedly been challenges along the way. 'We haven't got everything right, of course we haven't, and now going into the second year, it's about how we take that forward, how we really drive through and deliver on what I hear loud and clear people want.' She also agreed with Jonathan Reynolds, the Business Secretary, that she would give her party's first year in office a 'seven out of 10'. Asked whether Sir Keir's climbdown on welfare would harm the chances of lifting the two-child benefit cap – another major demand of Left-wing Labour backbenchers – Ms Phillipson said: 'The decisions that have been taken this last week do make future decisions harder. 'But all of that said, we will look at this collectively in terms of all of the ways that we can lift children out of poverty.' Admitting the changes to the welfare Bill would 'come at a cost', she insisted Ms Reeves would have the final say on the two-child benefit cap. Sir Mel Stride, the shadow chancellor, said imposing Lord Kinnock's idea of a wealth tax 'would be the worst thing to do'. 'We've also seen around 10,000 to 15,000 high net worth individuals leave our country as a result of this government's policies,' Sir Mel said. 'Some people – the socialists – might say 'well, who cares about that?' Well, the problem is that the amount of tax that those people have been paying requires about a third of a million people on average earnings, to cover that lost tax that's just gone straight out of the door. 'So the last thing we want to be doing now is piling further taxes on the wealth creators. We need to be, if anything, getting those taxes down, and empowering them to go out and do what they do best, which is creating jobs and creating wealth and prosperity for our country.'
