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Rachel Reeves must learn a hard lesson from Labour history – wealth taxes simply don't work
Rachel Reeves must learn a hard lesson from Labour history – wealth taxes simply don't work

The Independent

time7 days ago

  • Business
  • The Independent

Rachel Reeves must learn a hard lesson from Labour history – wealth taxes simply don't work

On family holidays to Greece, we would look at the unfinished buildings with people living in them and revel in their laid-back attitude. Except they weren't, of course. What they were doing was avoiding paying tax on a completed property. With their climate, they could leave the ground floor open to the elements. Something similar occurred in England and Wales. Have you ever looked at old houses and wondered why they went to the trouble of putting in windows, only to block them up? That was because in 1696 there was a window tax – the more windows, the higher the levy. So, they filled them in. Same in Scotland, where they removed the roofs to avoid property tax. That's why so many castles have fallen into ruin. It will occur again if the left get their way and impose a mansion tax. Some bright spark will come up with a ruse for escaping the charge, probably finding a loophole in the precise definition and how it's phrased, and a scheme will take off and be heavily exploited. This is always how it is. In every country in the world, the national sport is minimising tax legally. Going down the illegal route is different and dangerous. Staying within the law is seen as fair game – at least for those who can afford to employ wealth advisors who specialise in bending the rules. Which is why the current push for the imposition of more taxes on the well-off will backfire. This is what Rachel Reeves, the chancellor, is grappling with. Faced with an estimated £41.2bn deficit in the Treasury's account, she is considering how to plug that yawning chasm. She can raise taxes, slash spending or increase borrowing. Most probably, Reeves will select the first, whacking up taxes. At this point, the siren voices clamour for ordinary folks to be excluded and for the rich to bear the burden through raising the highest rate of income tax and targeting capital gains and inheritance duties. They won't notice it, is the mantra. Taxing the rich plays as well to the redistributive ideological belief. What's not to like? Except, they will notice it – and they will do their utmost to dodge the bullet. A previous Labour government under Harold Wilson hiked income and investment taxes to a combined 98 per cent, so Reeves has plenty of room to work with, in theory. Because how many people have ever paid that amount? Very few, if any. The tax avoidance industry – and it is an industry – received its biggest fillip, devising all sorts of wheezes. Meanwhile, the Tories delighted in highlighting the disincentivising of profit and wealth creation, the long-term economic damage it was causing. Eventually, in 1979, Margaret Thatcher drove Labour from office. So much for egalitarianism. It is ever thus. Remember how a few decades ago, all manner of unlikely individuals, among them Terry Wogan, Cliff Richard and Phil Collins, popped up as owning swathes of forest in Scotland? Or how backing films that never seemed to gain wide distribution, let alone make money, was the thing? Not so long ago, under Gordon Brown's administration, the UK possessed the longest tax directory in the world, greater even than India's, at 11,520 pages. We also control some of the globe's most accommodating tax havens in the Channel Islands, Isle of Man, British Virgin Islands, Gibraltar and Cayman Islands. There is plenty of scope for wriggling. But this time, there is an added risk. Many will vote with their feet and quit the country, something made much easier by today's tech and transport and aided and abetted by other nations dangling carrots to persuade them to relocate. Since last year's October Budget, reports today's Financial Times, some 3,790 company directors have gone. Some were non-doms who had their favourable tax status removed; the rest, most probably, were wealthy people who were subjected to Labour's other measures aimed at them, saw the likely future direction of travel, and quit. As one bank CEO told me, they are in no doubt that should Reeves go for unearned income, by hitting company dividends, say, investors will leave. The 'flight risk ', as he put it, is real. If Reeves is panicked into a wealth tax, she risks a massive exodus and little cash reward for her efforts. No, the socialist heart may not like it, but the only realistic selection Reeves can make is a small, across-the-board rise in income tax. It's the one step that will fill that funding gap. Anything else is tinkering, will not achieve the desired financial result and in terms of driving investment away and sending a ruinous international signal, will provoke more harm than good.

What's in City Press: ANC ‘betrayed' the left - SACP
What's in City Press: ANC ‘betrayed' the left - SACP

News24

time03-08-2025

  • Politics
  • News24

What's in City Press: ANC ‘betrayed' the left - SACP

'Who are they to tell us we can't contest?' — Solly Mapaila criticises ANC, accuses it of betraying the left The SA Communist Party (SACP) is preparing to go it alone in next year's local government elections, citing 22 years of stalled alliance talks, the ANC's partnership with the DA and the ANC's abandonment of working-class interests. Tariffs: Company loses order worth R750 million overnight A single factory in Gqeberha in the Eastern Cape, which builds highly sophisticated machinery and software for the automotive industry, has overnight lost contracts worth R750 million due to the US's new import tariffs. Sibiya threatens to drag Mkhwanazi to court over defamation claims Suspended deputy national commissioner for crime detection, Lieutenant General Shadrack Sibiya, has threatened to sue KwaZulu-Natal police chief, Nhlanhla Mkhwanazi, following explosive allegations he made last month, accusing him and Police Minister Senzo Mchunu of being part of a criminal network. Fort Hare murders: Alleged 'mastermind paid' police officers probing the killings The alleged mastermind behind the murders of Fort Hare University fleet manager Petrus Roets and the vice-chancellor's bodyguard Richard Vesele allegedly paid money into the accounts of police officers deployed to investigate the killings. Discontent in DA over the provision of bodyguards for MPs Discontent is brewing within the DA, with the party accused of functioning like characters in George Orwell's Animal Farm, where some are more equal than others. The ANC's dreadful cousins The ANC should stop subbing with the ignoble, immoral former liberation movements, including those of Zimbabwe, Namibia, Tanzania, Angola and Mozambique, writes Mondli Makhanya Trump tariffs: A call from Ramaphosa may be government's last hope With all diplomatic efforts having failed and coalition partners at each other's throats, the ANC government is scrambling to protect key industries while facing US demands that could force changes to BEE policies and land reform. Top politician's firearm linked to child's shooting More than a year after being shot twice in the head during an apparent political strife, a 10-year-old Grade 4 pupil from Juju Valley, an informal settlement in Seshego, Limpopo, has never been the same. Never-ending drama: Mandela family feud escalates over plan to convert Houghton house into museum Madiba's grandchildren at loggerheads, with claims that some have been denied access to the mansion, which is under renovation. Gauteng school for disabled children faces an infrastructure and equipment crisis Despite officials' claims that every pupil has access to a wheelchair, heartbreaking scenes of children crawling along the ground reveal a shocking reality. Cracks in the Tshwane coalition are widening The coalition government that controls the City of Tshwane Metro is unstable after ActionSA had to fight fires last week over allegations that its governing partners are planning to bring a motion of no confidence against the mayor. The Mommy Club's 'Her Majesty' claims ex-lover's wife is stalking her Reality TV star Happy Simelane says she is being stalked and harassed by the wife of a man she dated last year without knowing he was married. Jub Jub faces new fraud probe over R120 000 in unpaid debts Controversial media personality Molemo 'Jub Jub' Maarohanye is under police investigation after being accused of defrauding a man who lent him R50 000 for an event. Another security provider has also come forward claiming he owes him R70 000 tied to the same event. Legal Aid told to rehire former executive The Commission for Conciliation, Mediation and Arbitration (CCMA) has found that the dismissal of Legal Aid SA's head of property portfolio, Buyisiwe Mpungose, was substantively unfair and ordered that she be reinstated. National Dialogue: Task force raises concerns over lack of budget Less than two weeks before the first planned convention of the National Dialogue is set to begin, disagreements have arisen within the preparatory task team (PTT) over the budget and whether proper legal channels are being followed in appointing service providers for the event. Russia steps up presence in Mozambique Russia is preparing to fill the void left by American emergency aid organisations such as USAid in Mozambique. Emails, threats and denials: Inside the explosive clash between Paul O'Sullivan and ActionSA leaders The war of words between ActionSA leaders and forensic investigator Paul O'Sullivan reached a boiling point this week after a blistering 'high importance' email surfaced. From helping villagers access safe water to climbing Mount Kilimanjaro to help young girls, Noqobo Bongoza is an example of how one can make a huge difference in a community. Tim Spirit | Please bring back the glitz and glamour of the PSL awards While social media buzzed with debates over the PSL player awards selections, it is the reputational damage following the event that should have the league's authorities concerned. Zim rugby hero shares what it means to qualify for World Cup As a schoolboy, Zimbabwe and Sharks flanker Tino Mavesere used to draw sketches of Springbok legends Tendai 'Beast' Mtawarira and Schalk Burger. The SA Rugby Union (Saru) has stepped up its efforts to extend Rassie Erasmus' contract as Springbok head coach. Atisang Batsi's 43rd birthday will coincide with the Rustenburg-based outfit's debut in the Premiership. Athletics Free State president, Steven Swarts, is disputing the validity of Athletics SA's disciplinary hearing against him.

The Natural Response Is ‘Fight, Fight, Fight'
The Natural Response Is ‘Fight, Fight, Fight'

Wall Street Journal

time01-08-2025

  • Politics
  • Wall Street Journal

The Natural Response Is ‘Fight, Fight, Fight'

Peggy Noonan advocates a measured response to the political fights of the day in 'Trump Never Says 'No' to a Fight, Fight, Fight' (Declarations, Jul 26). The drip, drip, drip of government growth and progressivism for generations has undermined our society. To think that a measured response to the left's excesses would result in real change defies experience and belief. I hope that President Trump and his ilk are temporary. They and their behavior are a reaction to our mistreatment and should hold power only long enough to move our country back to the center—or maybe a little further right until things balance out. It's about time.

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