A year on from her economy-crashing 44-day premiership, Liz Truss and her faction in the Conservative Party are making a comeback.
These tax-cutting, small state libertarians want to see lower taxes to benefit the rich and reduced public services to the detriment of the rest of us.
They’ve been all over the media, focusing their efforts on attacking one tax in particular. They are lobbying the Prime Minister to abolish it. The tax in question? Inheritance tax.
Inheritance tax is described as one of the most unpopular taxes in the UK – the most unpopular tax by some accounts.
However, I’m going to try to convince you that inheritance tax, although flawed, is worth defending against the tax cutters.
Because there’s a greater issue at stake here: inheritance tax raises significant revenue for our public services. At a time when our NHS, schools and other services are stretched to their capacity, it would be reckless to cut their funding.
Will you have to pay inheritance tax?
Let’s start with some facts about inheritance tax. Firstly, hardly anyone pays it. More than 96% of estates never pay inheritance tax. Although one in three people think they will have to pay it. This gap between perception and reality may partly explain the tax’s unpopularity.
In reality, because of tax free thresholds and allowances, the vast majority of people can pass on up to £1 million to their children and grandchildren without paying any tax. Read the facts about inheritance tax on our blog.
Secondly, abolishing inheritance tax would only benefit a small number of wealthy people: let’s not mince our words, it would be a tax cut for the rich.
This week the Institute for Fiscal Studies estimated that if inheritance tax was scrapped, half the benefit would go to the top 1% of wealth holders, who would get an average of £1 million each in tax savings.
Inheritance tax funds our public services
My final point is this: inheritance tax raises important revenue for our public services. Currently it brings in about £7 billion a year. Forecasts estimate this will rise to £15 billion in ten years.
Large numbers can sometimes seem vague or even meaningless, so let me put these into context. £15 billion a year is half of the UK’s day-to-day defence budget; it is nearly 20% of the UK’s education budget. That’s a massive amount of money when schools are crumbling and you can wait weeks for a GP appointment.
Inheritance tax raises significant revenue for our public services. If it is abolished, it’s very likely that the money will have to be found from elsewhere (likely from higher taxes on working people), or that public services will have to be cut. I think you’ll agree that most people would support neither option.
We’re pushing back against the tax cutters
I understand that people have strongly held views on inheritance tax, especially as it is paid at a particularly difficult time for people as they’ve just lost a loved one. I do hope I have explained clearly why we at Tax Justice UK support it. We need to reform inheritance tax, not scrap it.
Our Executive Director has been on TV in recent days defending inheritance tax, and pushing back against the tax cutters. I was on TalkTV with Julia Hartley Brewer on Monday, you can watch the interview in full:
There’s a shorter version of the interview here on Twitter. We’d appreciate it if you could retweet it if you agree.
Our Head of Advocacy and Policy, Rachael Henry, was also on LBC with Iain Dale pushing back against abolishing inheritance tax. You can listen here.
Our campaign to tax the most polluting companies and super rich individuals – and invest that money in renewables and the green transition – is growing.
This week Oxfam came out in favour of taxing the UK’s biggest polluters, citing our research.
They want to see fossil fuel companies and the super rich pay much higher taxes. The charity estimates this could raise £23 billion a year. We fully back their call.
This money could be invested directly into the green transition: in renewable energy and public transport infrastructure, creating high quality jobs in the process.
A tax on emissions would ensure the wealthiest and biggest polluters pay the most for tackling climate change. It’s so important to avoid the bulk of the cost of dealing with the climate crisis falling on ordinary people.
As the catastrophic effects of environmental and climate breakdown become clearer, it’s never been more urgent that we bring more and more partners onboard with our campaign.
A huge civil society group like Oxfam coming out in favour of taxes to help deal with climate change is a big step in the right direction.
We also joined together with 400 businesses and civil society groups yesterday to push back against Rishi Sunak’s plans to water down the UK’s net zero policies. You can read the letter here.
We have the ear of MPs
Not only are we building coalitions with big partners, we’re also making inroads with MPs.
We regularly meet with senior politicians to make the case for a fair approach to tax and climate.
Our Executive Director Robert Palmer is also on TV and radio, promoting our message – and pushing back against those defending fossil fuel giants.
If you didn’t see it, Robert was on GB News last week debating Jacob Rees-Mogg on why a windfall tax on highly profitable North Sea oil and gas companies is a good idea.
This is the work we’re doing week-in, week-out: building movements and partnerships – and spreading the message about progressive tax reform in the media, with politicians and the wider public.
One of the UK’s most powerful union leaders is piling pressure on Labour to back higher taxes on wealth.
This week Paul Nowak, general secretary of the Trade Union Council’s (TUC), suggested that a “modest tax on the wealthiest 0.3 per cent of individuals” could raise £10bn a year for public services.
Nowak said: “Labour have already set out what they’ll do on clamping down on non-doms… But we think that conversation needs to go further.”
“With living standards plummeting, public services on their knees, and rampant wealth inequality blighting every corner of the country . . . fair taxation must be a key part of a wider set of policies to help reset the economy to work for working people.”
We can convince Labour
The TUC and its constituent unions represent millions of workers, so Labour will not be able to easily ignore Nowak’s comments.
The public supports what Nowak is saying. New polling shows that 61 per cent of people support higher taxes on wealth.
If Keir Starmer and Labour make it into office at the next general election, they will face public services in an existential crisis.
To truly stop the slide, Labour will need to spend more on public services. According to the party’s own rules, this will probably mean higher taxes. Raising income tax, or other taxes on ordinary households, will be politically difficult – and highly unfair during a cost of living crisis.
Wealth taxes on the super rich, those who can afford to pay a bit more, will be one of their only options.
A crisis is gripping our country’s schools. More than 100 have been told to fully or partially close. There are concerns that school buildings are unsafe because of a construction material that can degrade over time – especially when not maintained properly.
The government was warned several times about the existence in schools of this material; and they scrapped a plan to refurbish all secondary schools when they came into office.
Coming home to roost
The crisis is a part of an endemic problem in the UK. Years of government underinvestment in public services has left us with crumbling schools and record NHS waiting lists, to name just two of the problems we face.
Insufficient government funding is pushing our society to the brink – and crises caused by underinvestment will only increase in the coming years.
Two weeks ago, the IFS put it bluntly: the UK faces a stark choice, either raise taxes, or face the decline of public services and the end of the welfare state as we know it.
At Tax Justice UK we campaign for the first option. We want to see new wealth taxes levied on the super rich (those with net assets over £10m) – and existing taxes like Capital Gains updated so the super rich pay the same tax rate as working people.
Wealth taxes gaining support
We're making big strides towards these goals.
This week over 300 millionaires, business people and celebrities demanded G20 countries intervene to stop the ballooning wealth of the super rich.
A full list of the signatories – including businessman Ian Gregg, film producer Richard Curtis and musician Brian Eno – can be found here.
And in a series about the future of government and state spending this week, the Financial Times said higher taxes on wealth look to be increasingly likely.
Not only do we need wealth taxes to support long-term investment in public services, we also need them to help struggling households through the immediate cost of living crisis.
New research we helped produce shows the public think neither the Conservatives or Labour are promising enough to tackle the cost of living crisis. And the next election will be swung by whichever party can propose the best solutions to it.
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