2. A wealth tax
Once the Conservative leadership election has concluded, a desperate government seems bound to slash taxes. The calculation will be that, in a cashstrapped country and the run-up to an election, the opposition could feel powerless to resist. But tax cuts will intensify the grisly arithmetic bequeathed by the costs of Covid. Labour sorely needs a smart revenue-raiser in its back pock
As the ousted PM’s party scrambles to “move on,” the opposition urgently needs to crystallise the unease
et, ready to force through in the first flush of victory.
In a society where fortunes are increasingly defined by what you own, rather than what you earn, the way to go is clear. Wealth has been swelling relative to income for decades: it must bear more of the burden.
The details are less important than that principle. With the biggest slice of British wealth tied up in property, we could go some way by—like Germany— rationalising the tax we already charge on it. Council tax is levied at lower rates on pricier properties, and remarkably is still calculated using valuations made amid the 1991 market crash. In the Federal Republic, it took the Constitutional Court to jolt politicians into updating an even older tax base, so maybe it’s more realistic to try something new.
Norway runs a general wealth tax, levied on all assets (minus debts) that an individual owns on New Year’s Eve, as valued on New Year’s Day. It begins to bite at 1.7m NOK (£140,000). It’s tried and tested, dating to 1892. But the Labour-led government has increased the total annual rates to 0.95 per cent for most liable individuals, and more for the rich, with a rate of 1.1 per cent for wealth in excess of a 20m NOK (£1.7m) threshold.