Rishi Sunak’s new government could raise up to £37bn to help pay for public services and the energy bills support scheme if it introduced a string of “wealth taxes”, according to tax equality campaigners.
Tax Justice UK called on the government to introduce five tax reforms targeting the very wealthy, who the campaign group said had done “really well financially” during the coronavirus crisis and national lockdowns, rather than seek to save money with further cuts to public services.
“Tax is about political choices. At a time when most people are being hit hard by the cost of living crisis it would be wrong to cut public services further,” said Tom Peters, Tax Justice UK’s head of advocacy. “The wealthy have done really well financially in the last few years. The chancellor should protect public spending by taxing wealth properly.”
The campaign group, which is calling for a “fairer tax system that actively redistributes wealth to tackle inequality”, suggests five “wealth tax reforms” that it said could bring in an additional £37bn in tax income. It said:
Equalising capital gains tax with income tax could raise up to £14bn a year. At present many well-paid people who earn an income from their investments such as stocks and shares can pay capital gains tax at a rate of 20% rather than income tax, which is as high as 45% for earnings over £150,000. CGT also applies to income from selling a second home or stocks and shares.
The campaigners said this would simplify the tax system and “treat all forms of income in the same way”. “There is no obvious reason why someone going to work should pay more tax on their wages than someone selling their second home, for example.”
Applying national insurance to investment income could raise £8.6bn.
Closing loopholes on inheritance tax could raise £1.4bn.
Scrapping the non-dom regime and taxing their offshore income could generate £3.2bn.
And introducing a 1% tax on super-rich people’s assets over £10m could raise an additional £10bn.
Tax Justice UK said “a small wealth tax applied to those at the very top” could raise nearly £10bn and would “help to rectify some of the issues with our existing wealth taxes, which are often avoided by the very richest”.
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The UK Wealth Tax Commission last year recommended that a one-off 1% wealth tax on households with more than £1m, perhaps payable in instalments over five years, would generate £260bn – more than enough to cover a year’s funding of the NHS and social care spending.
Arun Advani, an assistant professor at the University of Warwick’s economics department and a member of the Wealth Tax Commission, said: “We think there are 22,000 people with wealth above £10m in the UK. So you might want to start with them or even further up. If you started there, it would only be the top 0.05% of the population.”