Latest news with #TaxJusticeUK
The Independent
5 days ago
- Business
- The Independent
What is a wealth tax – and would it work in the UK?
Pressure is growing on Rachel Reeves to find new ways to boost the ailing economy after government borrowing reached the second-highest June figure since 1993 last month. Many now predict the chancellor will have little choice but to tweak taxes to find more funds for the Treasury following dramatic changes to government policy over cutting welfare spending and stripping back the winter fuel payment. At the same time, calls are also growing to axe the two-child benefit cap – a Tory-era policy which experts say keeps 400,000 children in poverty and runs contrary to Labour 's missions. These policy decisions, paired with a difficult economic backdrop, will require funds from somewhere. The chancellor has so far stuck to Labour's manifesto commitment not to raise taxes for working people, meaning tweaks to national insurance, income tax, and VAT are off the table. This means more creative tweaks may be under consideration for her next autumn budget, building on changes already made to levies like inheritance tax and employers' national insurance. One option an increasing number of campaigners are pointing to is a ' wealth tax', an economic policy adopted by very few countries which focuses on the ultra-rich. Here's everything you need to know about the idea and what the experts say about it: What is a wealth tax? A wealth tax is a direct levy on an individual's total net assets – things like property, investments, cash, and other possessions. Unlike most regular taxes, the idea is to target accumulated wealth, rather than only income earned that year. Alongside being a new way to raise revenue for the exchequer, the policy is also designed to redistribute wealth to reduce economic inequality. The UK already has some taxes that focus on assets, such as inheritance tax, capital gains tax, and council tax. Tweaking any of these may also be on the table for the chancellor later this year. Capital gains tax is most similar to a wealth tax in that it sees a levy charged on the sale of an asset. However, most models of a wealth tax would see an annual charge based on the value of assets held, even if they are not sold. The idea of a wealth tax has proven divisive among economic experts, with debates ongoing around its fairness, revenue-raising potential, and economic impact. Could a wealth tax work in the UK? Campaigners say a wealth tax could generate significant sums for the Treasury, whilst only affecting a small number of individuals who are less likely to feel the sting of higher receipts. Tax Justice UK is calling for a two per cent levy on individuals who own assets worth more than £10 million. They say this would affect 0.04 per cent of the population, while raising £24 billion a year. The calls come at a time when the wealth of the ultra-rich in the UK has increased massively in recent decades, while living standards have dropped for those on low- to middle-incomes. The Sunday Times rich list recorded 171 UK billionaires in 2023 – up from 15 in 1990. At the same time, there are now record numbers of children living in poverty in the UK, and in precarious living conditions like temporary accommodation. A wealth tax should be seriously considered by the chancellor, said author and host of the Macrodose podcast, James Meadway: 'It starts to chip away at the idea that we're just going to allow wealth to pile up in a very few hands forevermore.' Responding to criticism that a wealth tax would threaten investment in the UK, the economist said: 'Investment has fallen off a cliff between Brexit and the financial crisis. Sixty per cent of wealth in Britain is inherited. It's not something that's been built up by somebody going off and setting up a new business. 'If these people were any good, our economy would be better. It isn't better, so they're not that good, so it doesn't matter that much.' He added: 'It's not going to solve every single economic problem, but 24 billion is not a number to be sniffed at if you're the government right now looking at how you're going to continue to fund the NHS, how you're going to pay for not imposing massive benefit cuts, how you're going to get rid of the two child benefit cap. 'There's a whole stack of things that we could do with that money that isn't being done at the minute because it's just sitting in the hands of very, very wealthy people.' What are the issues with a wealth tax? One of the most difficult factors in calculating the benefits of any wealth tax is predicting what the behavioural response will be. While a wealth tax would raise fairly large sums in any scenario, this uncertainty means it is hard to model. A common concern put forward is the risk of 'capital flight,' where wealthy individuals – who tend to be more globally mobile – simply leave the UK, or at least move some of their assets. Wealth can also be held in a diverse range of assets, anything from cars to art, meaning it may be hard for tax authorities to know exactly how to enforce the levy. Dan Neidle, founder of Tax Policy Associates, said it is highly uncertain how much could be raised by implementing a wealth tax. While it is difficult to estimate exactly how many wealthy individuals would leave the UK should the measure come into force, the tax expert points out that just ten leaving could reduce the revenue by billions. This is because 15 per cent of the projected yield would come from just ten ultra-wealthy individuals, while 80 per cent would come from less than 5,000. Alongside the risk of capital flight, Mr Neidle argues that the economic damage of a wealth tax to the UK would be massive. He explained: 'If you tax something, you get less of it – always. All taxes are a trade-off; you need to just be clear about what they are. With a wealth tax, you're taxing savings and investment, so you get less savings and investment.' The tax expert points to modelling of wealth tax in the US and Germany, which found the long-term effect was a two per cent and five per cent reduction in GDP respectively. This would be damaging for the economy and hit employment hard. 'We need to respond not to what we want policies to do, but what they actually do,' Mr Neidle added. 'There are lots of ways you can reform tax and tax the wealthy fairly in a way that doesn't damage the rest of us.' These could include reforming land tax, capital gains tax, and inheritance tax. Any of these is probably a more likely option for Labour than introducing a wealth tax. But as autumn approaches, calls for some form of more redistributive measure will likely only grow louder.
The Guardian
15-07-2025
- Business
- The Guardian
Climate groups call for UK wealth tax to make super-rich fund sustainable economy
A growing number of climate groups are campaigning for the introduction of a wealth tax to ensure the transition to a sustainable economy is not done 'on the backs of the poor'. Last week campaigners from Green New Deal Rising staged a sit-in outside the Reform UK party's London headquarters as part of a wave of protests targeting the offices, shops and private clubs of the super-rich across the UK. The Pay Up campaign – backed by more than 20 civil society groups including Friends of the Earth, the National Education Union and Tax Justice UK – is calling on the government to bring in a series of wealth taxes as an alternative to spending cuts. It is one of a number of campaign initiatives focused on overhauling the tax regime being run by climate groups who say the revenue from the ultra-rich could fund investment, restore crumbling public services and help tackle the climate emergency. 'Fixing our broken tax system so that it finally taxes those who earn their income from assets and wealth at the same rates as the majority of the population, who earn their money from work, is the fair thing to do,' said Hannah Martin, a co-director of GND Rising. 'We must tax the booming fortunes of the super-rich to rebalance our economy and fund investment in our communities, our schools, libraries as well as much-needed climate action.' The campaign aims to highlight the growth in extreme wealth held by individuals and corporations in the UK. It calls on the government to introduce a 2% tax on assets over £10m, shut down tax loopholes and increase the tax paid on property and shares so that capital gains tax is equal to income tax. It is also urging the government to stop using public money to bail out big polluters such as failing water companies and fossil fuel firms. Tax experts at the Tax Justice UK campaign group say a 2% tax on wealth above £10m would raise £22bn every year, and the other tax changes advocated for by GND Rising could raise an additional £50bn in a single year. Martin said: 'Climate campaigners are calling for wealth taxes because we have been told for years that 'there's no money' to tackle climate change. But we can see along with the public there is enough money and it is being hoarded by the super-rich and polluting corporations. We need to unlock that wealth to tackle climate change and the cost of living crisis, and that means focusing on the government's tax policies to win that change.' There has been a growing clamour for a wealth tax in recent months from some economists, thinktanks and trade unions. In recent weeks prominent Labour figures including the former leader Neil Kinnock have added their voices. Opponents, the super-rich and their advisers and supporters, have raised concerns that such a move would result in the ultra-wealthy leaving the country, a narrative that has been amplified by a blizzard of news stories over the past year. However, experts say there is no evidence of a mass millionaire exodus from the UK, with the overall number of millionaires and billionaires having risen steadily over the past two decades. At the same time most people are faced with stagnating wages, rising living costs and decimated public services. Zack Polanski, who is standing to be the new leader of the Green party, agreed there should be a wealth tax to ensure the ultra-wealthy – who are also the largest emitters – pay their fair share to tackle the climate crisis. He argued that under the current plans to reach net zero emissions by 2050 the poorest in society were being asked to 'step up to tackle the climate crisis'. Sign up to Down to Earth The planet's most important stories. Get all the week's environment news - the good, the bad and the essential after newsletter promotion 'This is an emergency,' Polanski said. 'The government have a series of choices – and right now they are choosing to subsidise dirty and dangerous parts of the economy like aviation, oil and gas. They should instead ensure that the greenest option is always the cheapest. How dare they say there's no money left at the same time they also refuse to tax the super-rich?' GND Rising's Pay Up campaign staged a day of action last week during which more than 200 young people targeted sites connected to Britain's ultra-wealthy, including the billionaires Jim Ratcliffe of Ineos, the Reform treasurer Nick Candy, and the founder of Bet365, Denise Coates. It said it intended to step up its campaign for a fairer tax system over the summer. Martin said climate action 'must speak to the reality of people's lives and their anger at the inequality they are seeing in their communities'. 'The climate crisis and economy inequality are two sides of the same coin, because it's the same broken system making billionaires richer, fuelling the climate crisis, and leaving working people to pick up the bill.' She warned that unless climate campaigners showed that climate action was 'also about fixing inequality and the cost of living crisis, we risk our demands being dismissed as a 'nice to have' by politicians, ignoring the very real pain people are facing, and opening up our agenda to attacks by climate deniers like Reform'.
The Guardian
27-05-2025
- Business
- The Guardian
Fair taxation is about more than bashing the rich
You are right that wealth needs to be taxed more fairly (Editorial, 23 May), but the proposed solution from Tax Justice UK that you promote is too simplistic. Taxing assets above £10m sounds a nice way to restrict the pain to a very small number of people, hence its 78% support among the public. But the experience of other countries is that a wealth tax on the super-rich simply doesn't work (the IFS has many excellent articles on the subject). Wealth does need to be taxed more fairly, and equalising capital gains tax with income tax would be a good start – easy to administer and yielding significant revenues. Making council tax fairer would result in a massive redistribution of wealth. And middle-income earners – the biggest segment of taxpayers – will need to pay higher taxes. Only the first of these is politically straightforward – the other two would need a much greater consensus around solidarity and fair contribution than exists in Britain today, and politicians need to start laying the groundwork for that now if the tax system is to be made CraigLondon It is inarguable that Britain's economy has, as you say, become 'a machine for the upward redistribution of wealth' – a dynamic surely fuelling the fear-driven rightward drift of our politics. Yet contemporary surface trends alone cannot explain this volcano of discontent. A surprising amount of inequality remains rooted deep in mercenary medieval violence, bequeathing us a land ownership pattern that never seems to change. So, of course, as long as our public realm is threadbare, target the newly income-wealthy, but do not forget to tax the hoarders of these unearned historical assets (eg through land value tax). And never permit the affluent and privileged to criticise our struggling public services while arguing for tax cuts for their Brendan HillEdinburgh What is the purpose of a majority of British people being in favour of a wealth tax when too many non-productive UK billionaires dictate and control our trickle-up economy to their advantage? Is it ignorance, fear and cowardice that diverts the minds of too many parliamentary leaders and economists away from fairness and decency? Tax Justice UK is correct. A relatively modest wealth tax would enable practical moves towards equality, not least for students and staff in further and higher education. The government needs to give moral leadership, and here are policies for meaningful ways JonesEmeritus professor, Brunel University of London Your editorial ignores three factors: wealth is reinvested (alienate it and there is less to sustain our economy); inheritance and wealth taxes amount to double taxation (they are major disincentives to the wealth creation on which high-spending economies depend); in terms of the first tranche of taxation, that on income and in terms of 'who pays the bills', the top 1% pay 30% of income tax, the top 10%, 60% and the top 50%, 90%. Better public services depend on the encouragement of wealth creation, not its BiesterfieldEglingham, Northumberland The reason we have so many billionaires (and such an egregiously skewed distribution of wealth) is simply that our political parties depend on, and are beholden to, their billionaire MarksTring, Hertfordshire Have an opinion on anything you've read in the Guardian today? Please email us your letter and it will be considered for publication in our letters section.
Glasgow Times
24-05-2025
- Politics
- Glasgow Times
'Climate inaction will increase costs for Glasgow's households'
The smallest grassy patches can make a difference by providing food for bees and butterflies. Efforts to help improve local biodiversity and support the natural environment are more important than ever. To stop catastrophic climate change, we must take action to give nature the home it requires. We still need to support our nature reserves across the city. With high temperatures and the risk of water shortages, we have to protect wildlife habitats and extend nature networks in response to changing climate conditions. We are facing increasing threats from climate breakdown. The latest warnings on water scarcity show the urgent need to reduce our carbon emissions. We have to raise awareness about the current and future impacts of climate change on Scotland's water. It is important to acknowledge that climate change is a water crisis. We can feel the impact of changing weather through worsening floods, rising sea levels, wildfires and droughts. There is a need to reduce our water usage and support the adaptation of our water supply and wastewater services to help tackle the impacts of climate change. Climate inaction will increase costs for Glasgow's households and the economy unless big polluters are made to pay. Research by Global Witness has revealed that the costs of climate breakdown in the UK amount to an estimated £3,000 per household over the course of 2025. The cost of wildfires, flooding, crop losses, and droughts means higher bills for households, such as insurance and everyday essentials, warns Tax Justice UK. Unless polluters pay through a windfall tax, communities will be worse off and the super-rich will keep getting richer. The UK Climate Change Committee has published expert advice on what the Scottish Government must do to meet its ambitious 2045 net-zero targets. This committee is clear that the 2045 target is achievable, but only if the Scottish Government takes decisive and rapid action to reduce emissions from transport, home heating, and land use. Scottish Greens are also calling for the UK Government to listen to climate experts, take urgent action to fix the broken energy market, and end the artificial high price for clean green electricity, which is cheap to generate but expensive to consume. This comes following the publication of new monthly figures from the Office for National Statistics showing that inflation has jumped to 3.5 per cent in April, the highest level since February last year. Independent climate advisers have advised that the UK Government must act urgently to make electricity cheaper, through rebalancing prices to remove policy levies from electricity bills. We desperately need to fix the broken energy market that is plunging people into poverty all the while keeping our reliance on climate-wrecking fossil fuels. We're in a climate emergency. We need significant effort to be made to switch our homes to clean heat, and to protect our city from catastrophic damage. Delaying climate action actually costs a lot more in the long run.
The National
21-04-2025
- Business
- The National
Anas Sarwar rules out Scottish Labour backing 'wrong' wealth tax
In an interview with Martin Roche on the Glasgow local Glad Radio, the Scottish Labour leader refused to support proposals for a tax on wealth which campaigners say would help to level the playing field in a society which has become more and more unequal. Tax Justice UK has proposed a 2% annual tax on assets above £10 million, which they said would affect 0.04% of the UK population and raise £24 billion a year. Last month, various Labour MPs spoke in support of a wealth tax, saying the proposals were preferable to the £5bn in annual cuts to disability benefits outlined by the UK Labour Government. READ MORE: Tommy Sheppard: Shift tax focus from income to wealth to see real change Kim Johnson, the Labour MP for Liverpool Riverside, said: 'You cannot cut your way to growth. A wealth tax of 2% on assets over £10m would raise £24bn per year. 'When the government talks about 'tough choices' – why is this choice never on the table?' Speaking to Sarwar for Glad Radio, Roche raised similar concerns. 'An issue of inequality and growing financial inequality…,' he said, only for Sarwar to interrupt: 'Economic insecurity, financial inequality, social inequality, absolutely.' (Image: PA) Roche then went on: 'What I could afford in buying a house 40 years ago, my children who are in their 20s and early 30s now find it tremendously difficult, and it's a common problem in many parts of the world, but it's a particularly common problem here. 'Many of the arguments, of course, are that the rich have sucked up vast sums of wealth from around the world, and those in the middle and those at the bottom are now finding things that were accepted to be normal, unaffordable, but yet Labour refuses to introduce a wealth tax.' Roche said it was 'difficult to reconcile' a lot of what Sarwar had been saying about financial inequalities with Labour's refusal to countenance a wealth tax. The Scottish Labour leader responded: 'I think you've identified the right problem, and the right feeling after a solution is found, but I think it's the wrong solution.' READ MORE: UK facing 'unprecedented' politics as Reform UK top polls, John Curtice says 'Taxing the rich is the wrong solution?' Roche asked. Sarwar replied: 'No, no, no, no. I, because I think you've oversimplified it. So if you look at the last budget, so I'm all for progressive taxation. I believe in progressive taxation. 'If you look at the last budget, for all the criticism people make of Rachel Reeves's budget, it actually was the most redistributive budget in probably two decades, if you look at who got the most and who paid the most. 'But what has not yet creeped through into people's lives is how it impacts them in terms of the cost of living crisis, how it feels in terms of their own level of security or insecurity, and how it, what it means for their communities and their children.' Sarwar said there was 'a generational promise that's currently being broken' and that Scottish parents were no longer able to guarantee that their children would have better life opportunities than they did. He insisted that 'how you sort that is not a 'you're in government for nine months, you've got the magic potion and the magic portion is delivered and everything is fine''. Sarwar went on: 'It takes time, it takes difficult decisions, and I think this UK Labour Government is making many right decisions and is putting us in a firmer direction, but there is still work to do, and there's loads of work to do in Scotland.' Elsewhere on the radio interview, Sarwar was asked about recent polling which has found a major lead for Yes – and questioned on why support for the Union is not 'solid' after Labour's sweeping General Election victory in 2024. Sarwar said he had some 'serious questions about that poll, but it's for pollsters and pundits and commentators to talk about that'. READ MORE: Richard Murphy: Here's where we'll have a head start after a Yes vote He went on: 'I've not focused for the last four years on opinion polls, I've focused on winning. People may remember that when I took on this job four years ago, we were 32 points behind the SNP. 'No one gave us a hope in hell of beating the SNP in the General Election last year, let alone having a Labour government. 'Not only did we beat them, we beat them decisively and I'm confident we'll do the same again next year, but we've got to do the hard work and earn people's trust and earn their support and continue to re-earn their trust and re-earn their support.'
