Wealth inequality in the UK has increased since the financial crisis, according to a major new survey from the Office for National Statistics. Tax Justice UK is calling on politicians to increase taxes on wealth to tackle this problem.
The ONS Wealth and Assets Survey provides a rich picture of wealth in the UK since the Brexit referendum. It shows total UK household wealth grew to £14.6 trillion between June 2016 and July 2018, with pensions (£5.36 trillion), property (£4.49 trillion) and financial investments (£1.84 trillion) accounting for the bulk of Brits’ wealth.
Robert Palmer, Executive Director of Tax Justice UK, said: “These figures reveal that wealth inequality has increased over the last decade and remains stubbornly high. This has real world consequences. Access to wealth gives you more life opportunities and better health.”
“Inequality has been a major talking point in this election. Taxing wealth more has to be part of the solution if we are to get the public services voters consistently say they want.”
Increased wealth inequality has been driven by fewer people owning their own homes, while at the same time property prices have risen for those lucky enough to be home owners.
Households with private pensions saw a 42% increase in the value of their pot, property wealth grew by 13%, and those with financial assets saw a 16% increase in value.
There is a widening gap between the haves and the have nots, with wealth inequality increasing over the last decade. Key points include:
Meanwhile, new figures from the OECD released today show that the UK is in the middle of the pack when it comes to how much tax the government raises, with 33.5% of UK GDP raised as tax revenue. The UK ranks 20 out of 36 wealthy countries, behind Spain and Germany.
Robert Palmer said: “As well as being a fundamental building block of a decent society, tax has a crucial role to play in rewiring the economy so it is more equal. The OECD’s league table shows that there is plenty of scope for higher levels of tax as a proportion of GDP if you compare the UK to similar countries.”
With all the manifestos now published it is hard to recall an election with a bigger gap of ambition between the main political parties.
So in summary, what are the parties offering on tax:
The Conservative manifesto was the dog that didn’t bark. Heavily trailed promises to slash inheritance and corporation tax and increase the higher income tax threshold didn’t materialise. An increase to the national insurance allowance does feature but is likely to mostly benefit the already comfortably off.
The Conservatives have promised reviews of both business rates and entrepreneurs relief. Our Manifesto for Tax Equality highlighted how these are not fit for purpose, so it’s welcome to see action promised. There were also vague promises to limit the “arbitrary tax advantages for the wealthiest in society,” showing how the centre of gravity on tax and spend is moving leftwards.
The Labour Party’s tax and spend pledges continue to make waves and it’s not really surprising given the bold policies outlined in their manifesto. These include income tax increases for people earning £80,000+ and a rise in corporation tax. The party’s 20 page roadmap for cracking down on tax avoidance and evasion included many of the recommendations in our own manifesto.
Labour also adopted our campaign ask to tax income from wealth at the same rate as income from work. This is a really welcome step forward.
The Liberal Democrat manifesto charts a middle course. An evergreen pledge to put a penny on income tax, was earmarked to the NHS. In line with our manifesto asks, the party will also end the tax free allowance on capital gains and nudge corporation tax up to 20%.
The Green Party set out a bold approach to increase taxes on wealth. They matched Labour’s plans to tax income from wealth the same as income from work. They are the only party to have a comprehensive proposal to reform the taxation of property. This was matched by a commitment to increase corporation tax.
The Scottish National Party was the latest to reveal their plans. Their manifesto calls for a reversal of austerity, tax devolution and better resourcing for HMRC and Companies House. But it shares none of the ambition on taxing wealth that is a feature of the Labour and Green manifestos.
On curbing tax evasion and avoidance there is a stark difference between the £12 billion Labour is promising to find compared to the Liberal Democrats £5.7 billion and the modest £640 million promised by the Conservative Party.
Tax Justice UK will continue to campaign for a fairer and more progressive tax system. Whoever wins the election, we will hold them to account for their promises.
Read our full Manifesto for Tax Equality for our vision of what a better tax system would look like.