A wealth tax, a once off never to be repeated, may be preferable to the alternative of more stealth taxes, which are death by a thousand tax cuts to fund, it appears, socialist dogma- driven policies. But a wealth tax could be used to fund growth policies not just to compensate for policy weakness and failure to cut financial cloth by throwing more money at welfare and the NHS.
ONLY THE WEALTHY’S COFFERS CAN SAVE THE COUNTRY’S FINANCES
It is an almost universal view among financial commentators, or at least those not blinded by socialist dogma, that the UK is fast running out of money and, if it does not cut its cloth to fit, will have to take more money from the people who work hard and are successful. Those people are of course not the “working people” who this Government are sworn to look after, as, according to the Prime Minister, “working people” means those who have no savings or are not just short of money but have declared themselves unfit to work. Although sworn to grow the economy as top priority, the Government now seems unable to cut its cloth at all, as its vaunted “hard decisions” to cut costs have now been reversed, such as the withdrawn proposal to cut welfare benefits by £5billion and the reversed policy on winter fuel payments for pensioners.
There is no contrition. But Government figures show that about 1000 more people sign up for PIP welfare every day. It is fundamental to the social contract we all sign up to that those who are severely disabled are supported by the rest of us, but everyone else should contribute by doing work to support themselves and their dependents.Today is it perhaps almost certainly the case that thousands, particularly those with minor physical problems or some anxiety or stress issues, are today signing off from the work environment and living off others? They may never go to work unless there is fundamental change. This welfare bill, excluding pensions, is due to go to £100 billion: it has to be severely cut but the Labour Parliamentary Party has decided, by rejecting its leaders’ legislation for small, almost insignificant, proposed cuts, that the benefits system is now like the NHS, a holy icon never to be reduced and only to be increased. Any suggestion that people may be abusing the NHS or the benefits system is to be ignored.
And so, the State gets bigger and experts, almost universally it seems, predict serious tax rises assuming the Chancellor will not throw away her fiscal rules. The Institute for Fiscal Studies through Paul Johnson, its head, seems despairing or disbelieving of the financial position of the UK created by not just anti-growth policies but chaotic thinking. But the burden of tax cannot, it seems, given Government philosophy, hit “ working people”. They have also promised, foolishly, not to raise core taxes. The NI increases they have done have caused major unemployment, some 60,000 jobs in the leisure industry alone lost already and rising perhaps says UK Hospitality to 150,000, and most smaller businesses have stopped hiring. Growth is predicted to be minimal. The deficit needs serious surgery once and for all with a major money raising exercise without borrowing more money, which the UK cannot afford to do.
In the UK, while perhaps most adults would say they would like to earn a lot more money and that would be one measure of success, those who do succeed are treated like pariahs and to be reviled in a philosophy of envy from Government . The very wealthy should it seems have their wealth redistributed to finance State profligacy. There is talk of considering a wealth tax, however immoral or negative that may be. In fact, a wealth tax is perhaps the only and best option, even though it will have drastic ramifications.
THE WEALTH TAX IDEA
Labour MPs, encouraged by Unite and other unions, are suggesting a 2% wealth tax on individuals with net assets over £10 million, suggesting this could raise up to £24billion per year, echoing a report by Tax Justice UK. Further, a King’s College report suggests, according to its Dr Trippet, that the Times Rich List indicates the wealthiest 40 families in the UK own more wealth than 50% of the entire population. The Wealth Tax Commission report from 2020 suggests a wealth tax at a £2million threshold could raise £80 million over 5 years. Precise amounts that could be raised by a wealth tax are unclear, but they are potentially substantial. On the other hand, many experts , including the IFS, believe wealth taxes in other countries have largely failed and raised little money: nice in theory but not practice. But what choices are there? Keir Starmer has always ruled out wealth tax but, given he changes his mind with the wind so much, would this change be any surprise, just more of the same from this incompetent leader.
Going a wealth tax route at as high a threshold as possible, say £10 million, on a one-off basis perhaps is necessary, as there is a crisis with no easy answer. The typical chiselling with more and more stealth taxes, like that, possibly spiteful, inheritance tax imposed on farmers and the VAT on school fees, will just leave doubt on the way forward. Arguably, a once and for all good start is needed. A serious wealth tax risk is that financially successful people and those with the most potential to succeed financially, that is ambitious workers, and investors will be put off the UK by a Government which is unrestrained in its capacity to raid the fruits of people’s labours.
Already thousands of better off people who are successful through their own efforts have left the UK frustrated by the disdain for them at Government level and the tax theft perpetrated against them. If it is thought that, having broken the anathema of a wealth tax once, it means the Government will feel able to come back each year for more, then this country’s potential will be demolished. The 20% of the population who keep this country prosperous will up sticks and a downward spiral would continue. So, safeguards will be necessary beyond a mere reassurance that this really is one-off. Government promises are easily broken.
Any wealth tax should not be used to fund more public spending on things such as welfare benefits , but rather for those policies which promote growth.
One suggestion to ensure integrity of the one-off promise would be perhaps an undertaking that, if ever in future years a further wealth tax is imposed, then all previous such taxes paid will be repaid with substantial interest. That would deter a breach of promise by Government.
And, if a wealth tax is imposed, it should not be done with disdain for wealth, but with national gratitude to the wealthy for digging us out of the financial hole we are in, whichever political party we care to blame. Would this perhaps not be better than taxing further already struggling middle-earning families?
And at the same time Government should commit to fixed Government spending for once and a promise to cut the cloth to fit, not continuing to expand the spending and so the taxes. Even if, regarding benefits for example, the Labour Party will not countenance legislation which reduces the cost, perhaps the Minister, Liz Kendall, could improve things by at least requiring all benefit claimants to be assessed face to face rather than box ticking over a phone call.
Maybe all options of further taxes contemplated by government will cripple the economy and, it seems, this Government cannot sustain a single policy to benefit hard working people.
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