January 4, 2019
Amount Chancellor could raise per year with wealth tax tweaks
Just a few small tweaks to wealth taxes and subsidies could raise £7 billion a year by 2022-2023, according to a report by the Resolution Foundation.
In anticipation of the Chancellor’s 2019 Spending Review, the think tank has released analysis identifying the low-hanging fruit of tax reform.
Entrepreneur’s relief, for instance, gives a small class of taxpayers huge capital gains tax cuts with no evidence of any gains in productivity or growth. Reducing the amount of relief that entrepreneurs can claim to a tenth of its current level is estimated to save £1.6 billion annually.
In addition, the think tank finds that reforming the regressive council tax system, including increasing the top band, could raise £1.4 billion. Clamping down on inheritance tax loopholes and capping the tax-free lump sum on pensions tax relief are other wealth-related recommendations.
10% of households own 45% of all UK wealth, yet wealth is significantly undertaxed: around 50% of tax revenue comes from earnings, whereas capital-related taxes account for less than 10%. With a looming crisis in our public finances, it’s time to look seriously at taxing assets.