Latest news with #wealthtax
Bloomberg
2 days ago
- Business
- Bloomberg
Piketty Tells Starmer to Introduce a Wealth Tax in the UK
Prime Minister Keir Starmer has been urged by a group of economists including Thomas Piketty to implement a wealth tax they claim can raise tens of billions of pounds for the UK treasury. The pressure on the Labour government to consider a levy targeting the rich increased on Monday after more than 30 largely left-leaning economists wrote a letter in support of a tax on assets above £10 million ($13.4 million). It proposed starting work on a tax at the autumn budget, when Chancellor of the Exchequer Rachel Reeves potentially faces a fiscal hole as large as £30 billion.
Yahoo
2 days ago
- Business
- Yahoo
Should the UK introduce a wealth tax? Have your say
The UK government has faced calls to introduce a "wealth tax", as chancellor Rachel Reeves looks at ways to raise revenue ahead of the autumn budget to plug a hole in public finances. Higher borrowing costs, low economic growth and the recent u-turn on welfare spending cuts have added to pressure on public finances, raising speculation that Reeves will be forced to raise taxes in the autumn budget to balance the books. To help the UK's financial situation, former Labour leader Neil Kinnock recently suggested that the government impose a 2% tax on assets valued above £10m. This was something put forward by a group of cross-party MPs in letter to Reeves ahead of her first autumn budget last October. Reeves has refused to rule out a wealth tax in the upcoming autumn budget, though business secretary Jonathan Reynolds said on Friday that such a levy would be "daft". Read more: UK set to lose 16,500 millionaires this year as non-dom status ends One concern that has been raised about introducing a wealth tax is that this could prompt more high-net-worth individuals to leave the UK. A report released by Henley & Partners last week showed that the UK is already expected to suffer the largest outflow of millionaires globally in 2025. The Henley Private Wealth Migration Report 2025 forecasts a net loss of 16,500 high-net-worth individuals (HNWIs) from the UK this year, the highest such outflow ever recorded by the firm in the past decade of tracking global wealth migration trends. Juerg Steffen, CEO at Henley & Partners, said: "For the first time in a decade of tracking, a European country leads the world in millionaire outflows. 'This isn't just about changes to the tax regime. It reflects a deepening perception among the wealthy that greater opportunity, freedom, and stability lie elsewhere." In April, the Treasury confirmed plans to abolish the longstanding non-domicile regime, a move widely seen as a trigger for an accelerating outflow of wealthy residents. At the same time, an analysis published in June by the Tax Justice Network found that the 9,500 millionaires that were reported to be leaving the UK in 2024 represented just 0.3% of the UK's 3.06 million millionaires. Do you think the UK should introduce a wealth tax? Vote in the poll below. Yahoo UK's poll of the week lets you vote and indicate your strength of feeling on one of the week's hot topics. After the poll closes, we'll publish and analyse the results each Friday, giving readers the chance to see how polarising a topic has become and if their view chimes with other Yahoo UK in to access your portfolio
The Guardian
2 days ago
- Business
- The Guardian
Starmer and Reeves should prepare UK for wealth tax, say top economists
Keir Starmer and Rachel Reeves have been urged by a group of the world's leading economists to use the autumn budget to prepare Britain for the introduction of a new wealth tax to tackle 'extreme' levels of inequality. With the government under pressure to raise taxes, the group of economists, including the French expert on wealth inequality Thomas Piketty, said the UK prime minister could raise 'tens of billions of pounds' while positioning Britain as a progressive leader on the world stage. In a letter shared with the Guardian, the experts warned that wealth in Britain – like many rich countries – had become concentrated in fewer and fewer hands in recent decades at the expense of the nation at large. It comes as the chancellor, Rachel Reeves, faces mounting pressure from senior Labour figures and trade unions to raise taxes on wealth to cover a multibillion-pound shortfall in the public finances. 'Keir Starmer and Rachel Reeves can build a tax system fit for the 21st century – that promotes fairness, first-class public services and good living standards for everyone,' the economists wrote. 'We cannot allow extreme wealth inequality to deepen while millions of people are consigned to struggle for a basic quality of life. A progressive wealth tax is a critical step forward, and one that we urge the UK government to take.' Signatories of the letter include the leading Indian development economist Jayati Ghosh, José Antonio Ocampo, a former Colombian finance minister and ex-UN undersecretary-general for economic and social affairs, and the globally acclaimed economist Ha-Joon Chang. The group of more than two dozen signatories said a 'modest' net wealth tax on assets of more than £10m could raise 'enormous sums of money' that could be used to avoid a return to austerity while tackling rampant inequality. Reeves is reportedly prepared to reject backbench Labour demands for the introduction of a new tax on wealth, although has so far publicly refused to rule out the measure. Advocates include Neil Kinnock, the former party leader. Several of her cabinet colleagues have poured cold water on the idea, including the business secretary, Jonathan Reynolds, who last week publicly denounced a new levy as a 'daft' idea that would not work. It is believed the Treasury would prefer to use existing features of the tax system – including levies on capital gains, inheritances and pensions – to raise money from rich individuals, rather than dedicate resources to create and administer a new levy, which could have mixed results. The Institute for Fiscal Studies has argued that a dedicated new levy could deter investment in Britain and would be a 'poor substitute for properly taxing the sources and uses of wealth' through other means. It said that implementing a wealth tax would be difficult, requiring a new administrative apparatus to value assets, which could be open to rich, well-advised individuals shifting around their holdings to game the system. Critics also say super-rich individuals could leave the UK. While stand-alone wealth taxes are used in some European countries – including Spain, Norway and Switzerland – several other leading nations – including Austria, Denmark and Germany – have abandoned them. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion However, the leading economists said it would be possible to overcome the difficulties associated with the design and administration of a new wealth tax, urging the UK government to launch a consultation at the autumn budget. 'Starting at the autumn budget the pieces of the puzzle – from consultation to design – can be collected to allow the government to roll out a wealth tax within this parliament. This could improve people's lives in years to come and avoid austerity for key services we all benefit from,' they said. The campaign group Tax Justice UK, which coordinated the letter, has estimated that a 1%-2% wealth tax on assets of more than £10m would affect only 0.04% of the population, and could raise up to £22bn for the exchequer a year. Ghosh, backing the call for a wealth tax in the UK, said: 'Not only is a net wealth tax a vital step to tackle inequality and improve living standards, but it is obviously best done with international cooperation. 'Keir Starmer and Rachel Reeves can position the UK as a progressive leader on the world stage. We urge them to work collaboratively with the international community to ensure that the super-rich pay their fair share, wherever they reside.' A Treasury spokesperson said Reeves was focused on growing the economy to strengthen the public finances. 'We are committed to keeping taxes for working people as low as possible, which is why at last autumn's budget, we protected working people's payslips and kept our promise not to raise the basic, higher or additional rates of income tax, employee national insurance or VAT,' the spokesperson said.
Yahoo
2 days ago
- Business
- Yahoo
Jonathan Reynolds slams wealth tax as ‘daft' in broadside against Labour left
Jonathan Reynolds has dismissed the prospect of a wealth tax as 'daft', amidst repeated warnings from the City that the policy would damage the UK economy. In a podcast interview with GB News, the business secretary told those on the left of the Labour party: 'Get serious!' Reynolds insisted that much of Labour policy already constitutes taxes on the wealthy. He said: 'This Labour Government has increased taxes on wealth as opposed to income – the taxes on private jets, private schools, changes through inheritance tax, capital gains tax.' The business secretary said that this kind of tax – alongside the existing taxes on assets and wealth – has no equivalent around the world: 'Switzerland has a levy, but they don't have capital gains or inheritance tax. 'There's no kind of magic [tax]. We're not going to do anything daft like that. Reynolds added: 'I say to people: 'Be serious about this.' The idea you can just levy everyone… What if your wealth was not in your bank account, [what if it was] in fine wine or art?' To wealth tax or not to wealth tax? Open speculation around a wealth tax was sparked by an intervention made by former Labour leader Lord Kinnock. Kinnock criticised the government's 'lack of vision' and called for a two per cent tax on those with more than £6m. Senior figures in the Labour Party – all the way up to Downing Street – have since publicly toyed with the idea of a wealth tax. There was even another Kinnock in the mix – Stephen, the health minister – who told LBC that Rachel Reeves is looking 'very carefully' at a wealth tax. A Number 10 spokesperson said following Kinnock's comments: 'We have repeatedly said those with the broadest shoulders carry the greatest burden and the choices we have made reflect that.' 'Those with the broadest shoulders' has become a familiar refrain to media watchers as Labour spokespeople have grappled with the issue on air.
Yahoo
2 days ago
- Business
- Yahoo
Voices: There won't be a wealth tax – but Rachel Reeves can't afford to rule it out just yet
Normally, when politicians decline to rule something out, a sceptical media and public believe they are about to do it. But there should be one exception to this rule. Keir Starmer, Rachel Reeves and other ministers are refusing to rule out introducing a wealth tax in this autumn's Budget, when the chancellor is likely to raise taxes by at least £20bn to stick within her fiscal rules. I'm told Starmer and Reeves will not bring in a new wealth tax, such as the 2 per cent levy on assets of more than £10m advocated by a growing number of Labour MPs and Neil Kinnock, the party's former leader, to raise £10bn. A wealth tax is an easy slogan and fits on to a banner. It would do nicely for the Starmer allies hoping to nudge him in a more progressive direction as he seeks a long overdue 'story' for his government. But Reeves and Starmer are not convinced. The chancellor thinks wealth taxes don't work. Twelve developed nations had them in 1990s but only three remain; only one, in Switzerland, brings in lots of money. Reeves burnt her own fingers by targeting non-doms – a process begun by Jeremy Hunt, the outgoing Tory chancellor. I'm told Reeves privately dismissed fears the rich would respond by leaving the UK, saying: "They always say that, but it never happens." It is happening, and she is now considering changing her plan to make worldwide assets, including those in foreign trusts, liable to inheritance tax. One government insider told me: 'People can choose where to pay their taxes. It's very easy to move countries and they are doing it.' A new wealth tax would be complex, take years to introduce and probably not be worth the candle. Dan Neidle, founder of Tax Policy Associates, said its study found such a tax would 'lower long-run growth and employment, thanks to a decline in foreign and domestic investment. It would make UK businesses more fragile and less competitive, and create strong incentives for capital reallocation and migration.' Why not just say no to a wealth tax now? Reeves offered one explanation to her Tory predecessor Norman Lamont at a Lords committee hearing this week. He told her he found it 'a bit strange' the government has not ruled out the move. Reeves replied that if she ruled out one tax rise, the media would move on to the next option, and assume that one was going to happen if she failed to rule it out. A fair point – but not her only reason. Reeves and Starmer need to build bridges with the parliamentary Labour Party after it filleted their welfare legislation, so rejecting a wealth tax now would inflame tensions. I suspect that when the Budget comes, Reeves and her allies will whisper to Labour MPs they are introducing a form of wealth tax through other measures, while avoiding headlines about implementing a specific one. Another reason not to rule out a wealth tax is to help message discipline. Labour certainly needs more of that: ministers unwittingly fuelled speculation about tax rises in media interviews by giving different definitions of "working people'. Far easier to say taxes are a matter for the Budget and we don't comment in advance. Some senior Labour figures think Reeves's reticence is because she is considering proposals that are close to being a wealth tax – for example, increasing property-based taxes. I think she should bring in higher council tax bands for the most expensive properties. It's ludicrous that this tax is based on 1991 property values, and that in England, people in homes valued at more than £320,000 pay the same amount in their local authority. Reform could be sold as a genuine levelling up measure the Tories flunked as it would cut bills in the north and Midlands while raising them in the south. Alternatively, Reeves could increase capital gains tax for the second Budget running, perhaps by bringing it into line with income tax rates, which are higher. Some in government favour a rise in income tax with the money earmarked for defence, as I have suggested. Another option is to raise the top rate of income tax from 45 per cent to 50 per cent. But both ideas would leave Labour open to the charge of breaching its manifesto pledge not to increase income tax, national insurance or VAT. Reeves could argue that circumstances had changed in a more dangerous world. But breaking its promise might be a step too far for an already deeply unpopular PM and party. I don't think there will be a wealth tax. However, the rich shouldn't celebrate. The Budget will increase existing taxes on the wealthy, in line with the government's mantra of protecting "working people", while ensuring 'those with the broadest shoulders carry the greatest burden'. Health warning: creating losers is not pain-free for them or the government, as Reeves discovered when she brought in the 'family farms tax'. But reforming some taxes under a better banner – 'fair tax' – is her best shot.
