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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.
Daily Mirror
7 days ago
- General
- Daily Mirror
'I don't know how I'm going to put food on table let alone days out in summer holidays'
Almost half of parents (48%) are more worried about being able to afford things for their children this summer holiday compared to last year, grim research shows Almost half of parents (48%) are more worried about being able to afford things for their children this summer holiday compared to last year, grim research shows. This rises to 69% for lone parents, a survey by the Child Poverty Action Group (CPAG) found. Some 45% of parents say the cost of childcare is a challenge over the summer and 29% say they have to borrow money or go into debt to cover these costs, the study found. Parents said they will struggle to pay for food and snacks and other basics for their children, such as sun cream, as well as fun activities like sports clubs, a trip to the beach or small treats like an ice cream. Some 44% of parents said they will likely use a foodbank this summer holiday and two in five families (39%) said they would likely use a clothing bank. And more than half of parents (52%) said they were worried about the continued pressure on living standards taking a toll on their children's mental health this summer, while 48% said they were worried about their child's physical health. One parent told the survey: 'I don't know how I'm going to put food on table let alone days out.' One mum, speaking about their son, said: 'The money is just enough to pay the bills and buy essentials. I do feel for him because as a family we can't enjoy outings or short breaks during the summer holidays (which were fun at one time).' Another parent added: 'It [the summer holiday] should be a happy time, but for many people, it's just another mountain to climb. I wish there was more low-cost or free help for families during the holidays. We do our best, but it doesn't always feel like it's enough.' Head of education policy at CPAG Kate Anstey called for the two-child benefit limit to be scrapped. CPAG research estimates that ditching the Tory-era policy, which restricts claims for Child Tax Credit and Universal Credit to the first two children, would lift 350,000 children out of poverty and mean 700,000 children are in less deep poverty. Ms Anstey said: 'This research shows there will be more worry than wonder this summer for millions of desperate families who can't make ends meet. Ministers have promised better living standards and opportunity for all but with children facing another summer cut off from fun and friends - much more action is clearly needed. 'Government's autumn child poverty strategy must restore investment in support for families – including abolition of the two-child limit – otherwise a generation of children will be left behind.' A government spokesman said: 'We recognise the school holidays can be a pressurised time for parents, which is why this government is putting pounds back in parents' pockets both during the holidays and in term time. 'We are also continuing to fund free holiday clubs through the Holiday Activities and Food programme which provides six weeks of activities and meals for any child from a low-income family who needs it.' ::: Survation surveyed 1,580 UK parents on income-related benefits with at least one child aged 4-18 years for CPAG between July 10-17.
Daily Mirror
20-07-2025
- Politics
- Daily Mirror
Keir Starmer faces poverty grilling from top MPs amid call to axe DWP two-child benefit limit
Keir Starmer, who will appear at the Liaison Committee on Monday, has been warned that without scrapping the Tory-era two-child benefit limit he risks overseeing a rise in poverty Keir Starmer is set to face a grilling from MPs on levels of poverty amid fresh calls to axe the controversial two-child benefit limit. The Prime Minister, who will appear at the Liaison Committee on Monday, has insisted he will leave "no stone unturned" to tackle levels of child poverty But he faces warnings today that without scrapping the Tory-era two-child benefit limit he risks overseeing the first Labour government to see a "significant rise in child poverty". The policy, which has been blamed for trapping kids in poverty, restricts parents from claiming Child Tax Credits and Universal Credit for a third or subsequent child. Recently Education Secretary Bridget Phillipson said scrapping the measure remains on the table as part of a delayed child poverty strategy. She said it will be "looking at every lever and we'll continue to look at every lever to lift children out of poverty". Monday's session will give MPs the chance to quiz Mr Starmer on the strategy. Dan Paskins, executive director at Save the Children, told The Mirror: "The Prime Minister has been clear that tackling child poverty is his government's moral mission. mExpanding free school meals and Best Start Family Hubs shows ambition but will not be enough to truly reduce the number of children growing up in hardship." He added: "Every day 109 more children are impacted by the two-child limit, facing growing up without enough to get by, simply because they have more siblings. The Prime Minister has a choice to make ahead of the Autumn Budget: scrap the two-child limit on Universal Credit in full or risk being the first Labour government to oversee a significant rise in child poverty." Alison Garnham, chief executive of the Child Poverty Action Group, added: "The key question for the PM is given his government has a moral mission to reduce child poverty, will he now commit to scrapping the two-child limit in the autumn child poverty strategy as the most cost-effective way to get record child poverty down?" Speaking last month, Mr Starmer said: "I want to get to the root causes of child poverty. One of the greatest things the last Labour government did was to drive down child poverty. I am determined we will do that." MPs on the Liaison Committee include three senior Labour MPs - Debbie Abrahams, Helen Hayes, and Florence Eshalomi. All three signed an amendment to the welfare bill last month to block cuts to a key disability benefit - Personal Independence Payments (PIP). A government analysis of the reforms, which were eventually gutted in a major climbdown, had warned the cuts could result in 250,000 people being pushed into poverty.
The National
15-07-2025
- Business
- The National
Labour rushed to help Lindsey oil refinery. So why not Grangemouth?
Here, Michelle Thomson, the SNP MSP for Falkirk East – which includes Grangemouth, writes on the Labour Government's differing approaches. LIKE many, I was alarmed to hear of the potential closure of Lindsey Oil Refinery in North Lincolnshire at the end of last month. On June 30, Prax Group, the owners of the refinery, announced they were going into administration, and therefore the future of the site was at risk. The very same day, the UK Government sprang into action. Energy Minister Michael Shanks gave a statement to the House of Commons confirming the [[UK Government]] is funding the continued operation of the refinery, adding: 'The Government will ensure supplies are maintained, protect our energy security, and do everything we can to support workers.' Energy Minister Michael ShanksNow, I welcome this, and any action to save jobs is commendable. All options should be considered to keep Lindsey operating. But as the constituency MSP for Grangemouth, I cannot help but think – while the [[UK Government]] sprang into action for the Lindsey refinery the day the news broke, where was that sense of urgency and action for [[Grangemouth]]? Yes, the circumstances are different – but over a period of months, there was nothing even close to what took place for Lindsey in a day – no urgent statement, and little to no meaningful Government intervention. READ MORE: Labour admit 'not a penny' of £200m Grangemouth rescue fund spent This isn't the first time either. Many Scots were quite rightly astounded that the UK Government very quickly spent billions to save British Steel in Scunthorpe but came nowhere close for Grangemouth. It's worth repeating that Scotland generates well over 90% of the UK's crude oil in any given year – but now has no capacity to refine it. It's also worth repeating that Labour promised to save [[Grangemouth]] before the election and failed. Indeed, the leader of the Labour Party in Scotland said: "We would step in to save the jobs at the refinery." This is the second refinery to face closure on Labour's watch, with thousands of related jobs being lost elsewhere in the supply chain. It would appear that, when it comes to industry elsewhere in the UK, Westminster can immediately pull out all the stops – but when it's in Scotland, the [[UK Government]] simply isn't interested. READ MORE: 'Unacceptable': SNP hit out as Labour 'keep Tory-era veto on Scottish laws' Some may argue that these issues are for the Scottish Government to respond to. This is correct – but any response must include the power to take financial action in the form of significant borrowing powers. These are powers that the [[Scottish Government]] lacks. The truth is, Grangemouth is just as important to Scotland's industrial output as Lindsey is to England's. It's no wonder that a growing number in Scotland quite rightly feel that Scotland is an afterthought to this – or any – UK government. It begs the question: if the UK Government can immediately step in to save major industrial sites in England – on more than one occasion – then why not in Scotland? My view is, as it always has been, that the only way to ensure Scotland's massive natural wealth is utilised for the benefit of Scotland's people is with independence for Scotland.
The National
15-07-2025
- Politics
- The National
Polling on Jeremy Corbyn party is uncertain. Labour's worries are not
It appears on the face of it to be the delicious, ultimate irony. Self-styled "moderates" within Labour spent years undermining Corbyn's leadership and ultimately drove him out of the party completely – all supposedly in the interests of "electability". They have now discovered that he's actually more than electable enough to pose an existential threat to Labour from the outside. A note of caution is called for, though, because there's a long track-record of hypothetical polling questions exaggerating the likely popularity of new parties that are in the process of being set up. There were a number of polls in early 2019 suggesting that the breakaway centrist party Change UK could be a major player in British politics – but that failed to materialise and the party folded within less than a year. In 2007, Archie Stirling commissioned a YouGov poll that seemed to suggest his new centre-right Scottish Voice party could expect to take around 20% of the vote in that year's Holyrood election. In the event, Scottish Voice's actual support was only one-hundredth of that estimate. READ MORE: 'Unacceptable': SNP hit out as Labour 'keep Tory-era veto on Scottish laws' It's true that Corbyn is a far better-known figure than Stirling, and will almost certainly attract much more than 0.2% of the vote. It's also true that the Find Out Now poll showing him level with Labour can be regarded as more credible than Stirling's 2007 poll, because it allowed respondents to make a direct comparison between the Corbyn party and the full menu of other parties. But it's still unavoidably a flawed poll, because it's impossible to ask a hypothetical question of this type without drawing special attention to the addition of a new party that does not yet exist. That may in itself have been sufficient to artificially inflate the apparent support for the Corbyn party in the poll. In truth, there's no way to meaningfully measure public backing for the new party until it's up and running, with a name, a public face, and a set of policies. But where the Find Out Now poll – and others like it – are of some value is in identifying which parties Corbyn can expect to attract votes from, if he does indeed enjoy some support. The answer is clear: his votes will be coming overwhelmingly from Labour and the Greens. Former Labour leader Jeremy Corbyn (Image: Lucy North) A YouGov poll last week found that 31% of people who voted Labour in last year's General Election, and 58% of people who voted Green, are likely to consider voting for the Corbyn party. The Greens are fortunate in that they have an obvious method of transforming the threat into an opportunity. Zack Polanski is currently standing for the Green leadership in England and Wales, and has indicated that he may be open to an electoral pact with Corbyn and Sultana. But there is no equivalent get-out clause for Labour, who burnt their bridges with Corbyn when they expelled him and put up a candidate against him in Islington North. Even if the real support for the Corbyn party turns out to be only half of the 15% suggested by the Find Out Now poll, it looks highly likely that would still harm Labour's vote significantly, possibly reducing them to third or fourth place – and to below 20% of the vote. The UK may start to look very much like a country that is moving on decisively from the Conservative-Labour two-party system that has been in place for a full century.
