The government could raise up to £50 billion by reforming the way it taxes wealth, according to our new research with Patriotic Millionaires UK.
There is a growing consensus that higher taxation of wealth could help solve current economic crises – from low productivity growth to crumbling public services and wage stagnation.
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The IPPR, the IMF, the Resolution Foundation, the IFS, and even the Conservative-aligned think tank Bright Blue have all called for higher taxes on wealth in response to these crises.
With the UK economy experiencing the slowest growth of any country in the G7, the government should announce fairer and more robust taxes on extreme wealth in its upcoming budget. This could enable investment in essential public services and help to improve economic dynamism and growth.
Higher taxes on the wealth of the super-rich enjoy widespread popularity among voters across the political spectrum. Recent polling from YouGov found that 78% of voters support an annual wealth tax on those with assets worth over £10 million, including 77% of Conservative voters and 86% of Labour voters. A further 62% supported equalisation of tax rates on income from work and income from wealth.
The following six policies comprise Patriotic Millionaires UK and Tax Justice UK’s top policy recommendations for improving fairness, simplifying the tax system, and raising revenue ahead of the 2023 Spring Budget.
1. Apply a 1-2% wealth tax on assets over £10 million, raising up to £22 billion a year.
A small wealth tax applied to those at the very top of the distribution would affect only 0.04% of the population. This makes it much easier to administer than annual wealth taxes set at a lower threshold, as it would affect only around 20,000 people. It would ensure that those who have benefited enormously from structural economic changes over the last decade contribute fairly and create significant revenue for national renewal.
2. Equalise capital gains with income tax rates, raising up to £15.2 billion a year.
This would have the positive effect of simplifying the tax system and treating all forms of income in the same way. It has support from 62% of voters, according to recent research from academics at the University of Oxford. There is no obvious reason why someone going to work should pay more tax on their wages than someone living from their investments, for example. According to the Office of Tax Simplification, who advocated for this policy change in 2020, it could raise significant revenue for public spending.
3. Apply national insurance to investment income, raising up to £8.6 billion a year.
Instead of just focusing on the rates of National Insurance, the government should expand the tax base by applying National Insurance to income from investments – such as dividends from shares, rent from property, and interest on savings. This would equalise and simplify the treatment of different types of income under the taxation system, and ensure that income from wealth is taxed at the same rate as earnings from work. It would raise around £8.6bn. Simplifying the tax system would also substantially reduce tax avoidance by limiting possible avenues for avoiding tax.
4. End the inheritance tax loopholes that benefit the already wealthy, raising up to £1.4 billion a year.
The government should scrap or reform Business Relief and Agricultural Property Relief on Inheritance Tax. There is evidence that these inheritance tax reliefs are being used as loopholes by a small minority of the very wealthy to avoid paying the appropriate inheritance tax on their assets. Abuse of Agricultural Property Relief is likely pushing up the price of agricultural land for genuine commercial food production and has this year been criticised by the Office of Tax Simplification. Scrapping these reliefs could raise over £1.4bn a year. Alternatively, the Resolution Foundation has proposed reforms to prevent them being exploited, generating a smaller saving.
5. Reform the rules on non-dom status, raising up to £3.2 billion a year.
Non-domiciled residents in the UK (‘non-doms’) receive at least £10.9 billion in offshore income and capital gains each year, which they are not required to report to HMRC or pay tax on in the UK. Taxing this income would raise more than £3.2 billion in additional tax revenue each year and also remove the current disincentive to invest in the UK, according to research by academics Dr Andy Summers and Dr Arun Advani.
6. Introduce a 4% tax on share buybacks, raising approximately £2 billion a year.
Some of Britain’s largest companies are transferring profits to their shareholders at record levels. According to IPPR, if the UK had implemented a share buyback tax at President Biden’s proposed 4% rate, it would have raised £2.2 billion in 2022. Taxes on shareholder transfers would help to ensure that companies are not channelling profits to their shareholders at a time of national economic crisis and encourage investment in the real economy. Share buybacks artificially boost the value of shares that are overwhelmingly owned by the wealthiest in society.
These revenue figures are estimates based on research from government institutes, academics, and think tanks. In particular, the work of economists Dr. Arun Advani (University of Warwick) and Dr. Andy Summers (London School of Economics), co authors of the final report of the UK Wealth Tax Commission.
This policy package is an updated version of analysis released by Tax Justice UK ahead of the 2022 Autumn Budget. Changes reflect new revenue estimates for annual wealth taxes and Capital Gains Tax reform, as well as the inclusion of a tax on share buybacks in response to their rising prevalence, most notably in the US under President Biden.
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An opinion poll by YouGov for Tax Justice UK has found overwhelming public support for an annual tax on extreme wealth ahead of this week’s Budget.
77 per cent of Brits said they would support a 1% annual wealth tax on people with more than £10 million in personal wealth; 74% said they would support a 2% annual tax on people with more than £10 million in personal wealth.
Tax Justice UK Executive Director, Robert Palmer, said: “The NHS and public services are on their knees, but the Chancellor, Jeremy Hunt, government keeps saying we can’t afford to pay workers properly.
“There is an alternative. The government could raise £22 billion alone by applying a 2% tax on the wealth of the richest people in the country.
“And this latest poll shows that this would be popular with the public. Jeremy Hunt should use the opportunity of next week’s budget to tax wealth and start rebuilding our public services.”
The full polling tables can be downloaded here.
A Tax Justice UK briefing shared with MPs ahead of the Budget sets out six wealth tax policies that could raise up to £50 billion towards rebuilding the NHS and public services.
The briefing includes a proposal for a 2% annual wealth tax on people with £10 million in assets. This policy alone could raise £22 billion.
The revenue predicted from the proposed wealth tax differs from our previous calculation as a consequence of increasing the tax rate from 1% to 2%.
Senior Conservatives are again loudly calling for tax cuts in the upcoming budget on 15 March. Three in five Conservative party members want the Chancellor, Jeremy Hunt, to prioritize tax cuts. Right leaning newspapers are pushing this agenda as well.
Many Conservative backbenchers argue that slashing corporation tax would boost growth. There’s little evidence for this. We’ve had low corporate taxes for the last decade. At the same time our economy has stalled – pay has stagnated and the cost of living has increased.
A corporate tax cut would mainly result in soaring corporate bank balances – this at a time when many companies are reporting record earnings already.
As the 15 March budget approaches, we need to resist calls for tax cuts that benefit big corporations and push for higher taxes on the super rich instead.
Our NHS needs more resources
Not only are these calls for tax cuts reckless – we all remember what happened when Liz Truss tried it last time – they also ignore the state our NHS and public services are in.
Our teachers, doctors and ambulance staff are going on strike. Nurses are using foodbanks. Our NHS is in the middle of one of its worst crises ever.
These services are floundering. They urgently need more resources, not less. The government needs to provide more funding – and that should come from those with the deepest pockets.
That’s why we’ve been pushing a range of wealth taxes that could raise up to £37 billion a year. This money could be the lifeline our struggling NHS and public services need.
We need to tackle tax avoidance
The British Virgin Islands – dubbed a ‘financial secrecy hub’ by our international partners Tax Justice Network – was this week listed as “non-cooperative” on tax matters by the European Union.
Many will argue that it’s fair enough to list the British Virgin Islands as a place that helps the wealthy and powerful to avoid tax.
When people think of tax havens they often think exclusively of idyllic Caribbean islands. But this isn’t the whole story.
There is a conspicuous absence of any European countries from the EU list of countries that are “non-cooperative” on tax issues.
Tax Justice Network (TJN) have highlighted the EU’s own “axis of tax avoidance”: Switzerland, Luxembourg and the Netherlands. These countries help big companies slash their tax bills.
TJN also estimate that EU member states are losing over $17 billion in corporate tax a year from US firms abusing the law.
We’ve been campaigning for years for concerted global action against this sort of behaviour. Only once we close loopholes across the world will tax avoiders have nowhere to turn.
The UK itself is also a major hub for dirty money. With our allies, we won a big victory in this campaign for transparency two weeks ago when the UK property register finally went live. It forces overseas individuals to reveal themselves as the true owners of UK property, an asset which was often a vehicle for money laundering in the past.
This is a good example of how campaigning can work. We teamed up with anti-corruption groups, MPs from the Conservatives and Labour, as well as a number of investigative journalists to push the government to act.
Council tax debate
Council tax is set to rise by as much as five per cent in most local authorities this year. This could be ruinous for many households with already stretched finances.
And beyond this, council tax is simply unfair. Poorer households pay a much higher proportion of their income in council tax than do richer households. Someone living in a mansion in Westminster might be paying less council tax than someone in a two up, two down in the north of England. This is partly due to outdated council tax bands that haven’t been updated since the 1990s.
Council tax is necessary and useful – an increasing proportion of the money raised by local authorities pays for services like children and adult social care – but it must be reformed so richer households pay more.
I spoke to the Big Issue and appeared on Talk TV and GBNews this week to discuss the crisis in local authority spending and the difficulties that rising levels of council tax place on poorer families.
We support the cross-party Fairer Share campaign for a reformed approach to council tax that would see 3 in 4 people pay less.
Liz Truss is back! And if the media coverage from the last few days is any guide, she’s keen for the Conservatives to get back to cutting taxes for the rich…. Again.
One line in particular in her essay for The Sunday Telegraph caught my eye. In the piece she claimed that her programme of tax cuts for the wealthy was popular.
It’s hard to believe it was only a few months ago that her government collapsed in the wake of a disastrous mini-budget that saw the 45p rate of tax for higher earners abolished.
Yet it looks like Truss and her allies are gearing up again to make tax a big issue ahead of the Budget on 15 March.
Rest assured we will continue to call for reformed taxes on wealth, not a repeat of Truss’s tax cuts for the super rich.
Biden agrees with us
We are not the only ones calling for higher taxes on wealth. Over the pond the US President, Joe Biden, used his annual State of the Nation address to call out growing inequality.
In his speech he talked about making the “wealthiest and the biggest corporations finally begin to pay their fair share.”
And where the US goes, the UK often follows. We showed this in 2021 when we aligned with the Biden-led call for countries to adopt a global minimum corporation tax for big companies.
The UK really didn’t want to follow suit, but we campaigned and won the argument at the G7.
Who knows, perhaps we will hear UK politicians copying the rhetoric of Joe Biden here soon.
Shell profits double to £32 billion
Energy giant Shell has posted record profits of £32 billion, the highest in the company’s 115 year history.
These obscene profits, double what they posted last year, are largely down to soaring oil and gas prices following the Russian invasion of Ukraine.
The profits will boost the bank accounts of Shell's shareholders – Shell handed out £21 billion to shareholders in 2022 – while families across the UK struggle to pay their energy bills.
Last year we helped push the government to introduce a windfall tax on oil and gas companies. But it didn’t go far enough then and it doesn’t now.
The government must increase the rate of the windfall tax and claw back more of these profits. They must close loopholes used by oil and gas companies to reduce the tax they pay.
And, as our friends at the IPPR and Common Wealth think tanks have said, the government should tax shareholder returns at a much greater rate.
Former Chancellor Nadhim Zahawi was finally sacked on Sunday over his tax affairs. He was found to have breached the Ministerial Code.
This is a victory for tax campaigners. Those in public office must have the highest standards when it comes to their own personal tax affairs.
An ongoing problem is that HMRC is under-resourced. As I mentioned in last week’s newsletter, this may have led to them failing to collect billions of pounds of tax owed.
There is a broader problem - many super rich people will use any and all means to avoid paying tax, as I wrote in a comment piece for The Guardian last week. HMRC needs the tools necessary to investigate them.
We will continue to campaign for HMRC to be given more resources, so they can properly enforce our tax laws – and scrutinise the tax affairs of the rich and powerful.
Illicit offshore wealth exposed
Now for some good news. Owners of UK property will no longer be able to hide their identities behind overseas shell companies – long a tactic used to conceal what is estimated to be £100bn of illicit financing flowing through the UK.
A new property register forces everyone who owns a UK property through an offshore shell company to come forward and identify themselves publicly. The deadline for registering was Tuesday.
Unfortunately up to 13,000 offshore companies failed to meet the deadline. But many did, and thousands of offshore owners have been identified for the first time on the register.
This transparency will make it much easier for our tax authorities, journalists and campaigners to track the wealth of the mega rich.
The register was established as part of the Economic Crime Act, which we tirelessly campaigned for, alongside our allies. You helped push this over the line, with almost 120,000 signing our petition.
Where are the billions in missing tax?
It’s been a busy week for tax campaigners. It was reported that the Conservative party chairman, Nadhim Zahawi, has paid a £1 million penalty to HMRC for being ‘careless’ with his taxes.
Zahawi initially didn’t pay the right amount of tax on £27 million of income from YouGov, the polling company he founded. It’s been suggested he simply forgot. This stretches credulity, as our Executive Director Robert Palmer told GB News. Zahawi describes his actions as ‘careless’.
We all have to pay tax. When rich individuals and wealthy companies don’t fully comply, it dents confidence in the system for everyone else – and takes money away from our public services.
It’s staggering to believe that someone who was briefly Chancellor of the Exchequer, and in charge of our tax system, failed to pay his own taxes properly. It’s untenable that he remains in public office. Zahawi must go.
As Robert said on Sky News, the episode raises broader questions about how the UK’s tax authority, HMRC, operates.
The Zahawi case came to prominence following the relentless digging and media work of former tax lawyer Dan Neidle.
This case raises serious questions about HMRC’s own ability to investigate complex tax cases. HMRC’s problems go beyond Zahawi. The department lacks the tools and resources it needs to do its job properly.
Parliament’s spending watchdog said two weeks ago that there was a £42 billion black hole of unpaid taxes, in part because HMRC didn’t have the staff to enforce compliance.
HMRC staff who usually deal with tax dodging have been moved to work on Covid and Brexit in recent years, making the problem worse.
HMRC staff are under such a strain that they have announced they are balloting to go on strike. We're fully behind the over-stretched tax inspectors fighting for better pay and conditions.
These issues with HMRC are explored in greater detail today in a Guardian comment piece Robert wrote. In the piece he also sketched out the unfair – but legal – routes that are open to wealthy individuals and companies to reduce their tax bills.
In order to have a fair and effective tax system – that stops the rich and powerful playing by a different set of rules – HMRC needs to be properly resourced, as Robert told Julia Hartley Brewer on Talk TV.
HMRC staff are worth their weight in gold when it comes to bringing in tax. The government must invest more in the tax authority – and such investment would easily pay for itself through improved tax receipts. It’s an easy decision.
As Robert said on Talk TV, there are grounds for optimism. Over the last ten years governments around the world have made some progress on cracking down on tax dodging, in part due to pressure from tax justice campaigners. There’s so much more to do, but it is possible to change things.
News that the Prime Minister has ordered an ethics investigation into the tax affairs of ex Chancellor Nadhim Zahawi, is welcome, but will come too late for the public.
Zahawi has reportedly paid a penalty to HMRC of £1m as part of a tax settlement over allegations that he failed to pay the correct amount of tax.
But the damage to public confidence caused by the scandal has already been done.
Tax Justice UK Executive Director, Robert Palmer, said:
“Clearly it’s unsustainable for someone in these circumstances to continue to attend cabinet. Zahawi has to go.
“But the damage has already been done. At this time of year millions of people are filing their own taxes.
“The vast majority of people don’t have access to complicated means of slashing their tax bill. We need a wholesale reform to ensure that everyone, especially those with wealth, pay their fair share.”
The super rich just keep getting richer. And calls for wealth taxes are growing louder.
Since the start of the Covid pandemic, the world’s richest 1% have increased their wealth by a staggering £21 trillion – enough to lift 2 billion people out of poverty. That’s the shocking finding of a new report from Oxfam.
The report showed that the UK’s richest 1% are now worth £2.8 trillion, making them wealthier than two thirds of the UK population combined, as the Mail reported.
Rise in extreme poverty
Not only are the rich getting richer, but the poor are getting poorer.
Oxfam said the rise in extreme wealth was being accompanied by a rise in extreme poverty globally for the first time in a quarter of a century.
The charity is calling for the introduction of global wealth taxes on the super rich to reverse this rise in extreme inequality. And they are getting some important backers.
In October we set out five wealth policies that could raise £37 billion a year in the UK.
Big backers for wealth taxes
Tech billionaire Bill Gates backed the Oxfam report and said last week he supported the introduction of greater taxes on wealth.
While 200 millionaires from around the world have demanded leaders gathering at Davos this week consider wealth taxes. The Guardian newspaper also came out in favour in an editorial this week.
Bussinessman Ian Gregg, former director of highstreet baker Greggs, also said he supported our call for wealth taxes in a video in the UK this week.
Pressure is growing on governments around the world to take action on soaring wealth inequality. Public support for wealth taxes is spreading.
It’s been a great start to the year for the UK’s top earners. Our friends at the High Pay Centre calculated that FTSE 100 bosses were paid more in three days than the average worker will get across the whole year. The pay of the top company bosses is up almost 40% compared to last year.
But while the CEOs of Britain’s biggest companies are raking it in, many people working in our public services haven’t had a proper pay rise in over a decade. Given the ongoing cost of living crisis, it can’t be a surprise that nurses, ambulance drivers and rail workers have started 2023 with more strikes.
We can change things in 2023
If we are to tackle the problems our country faces, such as the collapsing NHS and care system, then we need much more public investment, supported by taxing the wealth of the super rich. I want 2023 to be the year when we start to see politicians act.
The budget in March is the first big chance this year for the government. Once again we’ll be pressuring Rishi Sunak and Jeremy Hunt to bolster public services by taxing the very wealthy more, as well as making the tax system fairer overall.
So much needs to be done
The crisis in our hospitals is a good example of the kind of battle we face this year but a version of that story could be told about a swath of public services. This fascinating Twitter thread from journalist John Burn-Murdoch sets out the impact of a decade of austerity. The state’s ability to respond to crises has been severely weakened.
We need politicians to prioritise long term funding for our public services. The fair way to do this is through taxing wealth more.
There is little doubt that the cost of living crisis has made things worse, but in 2022 we showed we can make the government act. Read more about what we achieved in 2022 here.
Election on the horizon
This year we will see all the political parties start to jockey for position in the run up to a general election due in 2024. It is a crucial moment to build the case for the role that a transformed tax system needs to play in dealing with the many crises this country faces.