Some constituents have contacted me proposing the introduction of Wealth Tax. This is where I stand:
The top 10% of taxpayers paid 60% of all income tax in 2023–24, up from 35% in 1978–79. The share of income tax revenue contributed by the top 1% of taxpayers rose from 11% in 1978–79 to 29% in 2023–24. I would always caution against believing that 68 million people living in the UK would have vastly improved services if we just tax rich people. It’s a nice idea but doesn’t stand up to scrutiny. More than third of people on low or no incomes don’t pay any tax at all. We do enormous amounts of wealth redistribution already. It can only take you so far.
Whilst the UK does not have a comprehensive, single wealth tax, but we do have several taxes on assets and wealth. Notably, the Wealth Tax Commission, which has no connection or link to the Government, found in 2020 that, if considering Inheritance Tax, Capital Gains Tax, Stamp Duty, and Stamp Duty Land Tax, the UK is among the top of the G7 countries for wealth taxes as a percentage of total wealth.
Our tax system has been designed so that the richest in our society rightly pay their fair share on their wealth and assets, with the tax system taxing wealth across their many different economic activities. These might include: acquisition, holding, transfer and disposal of assets and income derived from assets. Presently these tax levers generate substantial revenue; according to the Office for Budget Responsibility, over 2024/25, the Exchequer will accrue Inheritance Tax revenues of £8.3 billion, Capital Gains Tax revenues of £15.7 billion, and property transaction taxes of £14.1 billion.
I have been alarmed to read that over 10,000 millionaires have relocated from Britain due to the Chancellor’s tax raiding budget. The Adam Smith institute estimates that the the annual income tax revenue lost from high earners fleeing the country now matches the income tax contribution of over 528,000 average taxpayers. I am worried that punitive wealth taxes might exacerbate this issue, and would worsen problems of poverty and investment as you would have a shallower tax pool from which to draw revenue.
Moreover, despite Labour MPs standing on a manifesto pledging to avoid raising tax on “working people”, at the Autumn Budget of 2024, the Chancellor announced £40 billion of tax increases. As a result of this, the tax burden will rise to 38.2 per cent of GDP by 2028-29 - the highest level in the country's history.
Any further changes to taxation will be announced in future budgets. I will be sure to scrutinise any changes to the tax regime, and the impacts they will undoubtedly have on poverty and public service investment.
Kieran.