William Eichler 03 January 2019

‘Tweaking’ wealth taxes could raise £7bn a year, think tank says

‘Tweaking’ wealth taxes could raise £7bn a year, think tank says image

Reforming Britain’s wealth taxes could help the Government raise £7bn a year by 2022-23 to help cover the cost of public services, a think tank has argued.

A new briefing note from the Resolution Foundation claims that reforming five wealth taxes will help meet an estimated £36bn a year increase in the cost of public services by 2030.

The think tank recommends that England replicate Scottish council tax reforms, including increasing the rate paid in the top bands and cutting that paid in the lower bands.

This could raise £1.4bn a year, the think tank’s researchers calculated.

The briefing note also recommends that the Government freeze the inheritance tax threshold after 2020 and clamp down on inheritance tax loopholes. This would raise £500m a year.

The super-rich could be prevented from avoiding inheritance tax with the introduction of a ‘farmer test’ and by increasing minimum ownership periods for agricultural and business property reliefs, according to the think tank.

Britain has a record £13tn of wealth undertaxed relative to the size of its economy, says the Resolution Foundation

They argue a ‘wider debate’ about the role of wealth taxes is needed, particularly as the ageing population is set to increase the cost of the welfare state by £36bn a year by 2030 and by £83bn by 2040.

As well as reforming council and inheritance tax, the Resolution Foundation recommends making pension taxation more progressive by capping the tax-free lump sum at £40,000. This would raise £2bn a year, they say. The briefing note also recommends limiting entrepreneurs’ relief and scrapping former chancellor George Osborne’s ISAs.

‘Britain has unfortunately got used to weak income growth but soaring wealth, which is now worth seven times the size of our economy. It’s time our tax system caught up with that fact,’ said Torsten Bell, director of the Resolution Foundation

‘Maintaining our valued public services in the face of the big cost pressures of an ageing population, requires better wealth taxation to help fund this gap.

‘Yes this is politically difficult, but the good news is that relatively large sums can be raised simply by tightening up our existing wealth taxes and subsidies.

‘That is how we protect our public services without placing all the burden of taxation on hard earned income from work.’

Adam Corlett, senior economic analyst at the Resolution Foundation, said: ‘Britain’s wealth is undertaxed, and the wealth taxes we do have are in serious need of reform.

‘There’s a strong case for scrapping council tax and inheritance tax altogether, and replacing them with proper wealth taxes that are more progressive and harder to avoid.

‘The chancellor can make small steps in this direction by tightening up five of our existing wealth taxes and subsidies ­– raising almost £7bn in the process.’

Fair funding delay image

Fair funding delay

The delay to the fair funding review can only add to anxiety over the future of local government, says Mark Whitehead
Highways jobs

Senior Traffic Engineer

East Riding of Yorkshire Council
£32,029 - £34,788 per annum
Currently seeking an enthusiastic and experienced individual to manage our Traffic Team. East Riding of Yorkshire
Recuriter: East Riding of Yorkshire Council

Marketing Coordinator

Brent Council
£29,241 - £30,711 p.a. inc.
Looking for someone who is enthusiastic about arts and culture, can write great copy and has experience implementing marketing campaigns... Kilburn, London (Greater)
Recuriter: Brent Council

Lead Network Engineer

Camden London Borough Council
£45,504 - £52,786
In this role you will deliver a high quality and efficient network service, supporting staff and officers working from a variety of council offices... Camden, London (Greater)
Recuriter: Camden London Borough Council

Technical Support Administrator x2

Redbridge London Borough Council
£24,462 - £25,809 per annum
Applicants should be able to demonstrate knowledge of financial monitoring and deliver a comprehensive range of services. Redbridge, London (Greater)
Recuriter: Redbridge London Borough Council

Early Years and Childcare Improvement Team Manager

Redbridge London Borough Council
£48,492 - £51,450 per annum
If you have a passion for ensuring children have the best start in life and are a leader in the Early Years field we look forward to hearing from you. Redbridge, London (Greater)
Recuriter: Redbridge London Borough Council

Local Government News

Latest issue - Local Goverrnemnt News

This issue of Local Government News explores how councils can tackle modern slavery and trafficking in their supply chains, finds out more about Cambridge's first cohousing scheme and the launch of a new project to build a shared service pattern library for local government.

This issue also contains a special focus on children's services and how councils are protecting children following local safeguarding children boards being abolished.

Register for your free magazine