A Wealth Tax is morally & fiscally the right thing to do – By Jon Trickett MP

“We must show that pushing the burden of cuts, tax rises & the cost of living onto those on low & middle incomes is not only unjust, it is also unnecessary.”
Jon Trickett MP.

There is more wealth in our country than ever before. So how can it be that over 14 million people are living in poverty? The answer is that although we are one of the richest countries in the world, we are also one of the most unequal.

Whilst the richest 250 people living in the United Kingdom have seen their wealth increase by £106 billion since the beginning of the pandemic, there has also been a 33% increase in the use of food banks in the last 12 months.

This state of affairs is indefensible. And yet we are told that wealth inequality is unavoidable. Some even claim that wealth inequality is desirable. These arguments have been around even longer than capitalism itself. But since the labour movement came into being it has challenged these ideological claims.

As the Chancellor prepares to announce budget cuts in his Autumn Statement next week, it is now a matter of urgency that we provide concrete alternatives to the failed economic model that has delivered record levels of inequality.

We’ve already seen the Conservative government cut Universal Credit and break their election promise not to raise National Insurance tax. Energy bills are going through the roof. We must show that pushing the burden of cuts, tax rises and the cost of living onto those on low and middle incomes is not only unjust, it is also unnecessary.

This week I have published a report that proposes a radical overhaul of our tax system. The report includes four different options for a wealth tax, including a one off tax, an annual tax and a hybrid tax targeting increases in wealth.

I have also included proposals for bringing dividends and capital gains in line with income tax, closing the loopholes used to avoid or evade tax and for tackling big companies hoarding cash in reserves.

The report shows that the median revenue of the four wealth tax options would come to £218.4 billion over the course of a 5 year parliament. Another option is to bring dividends and Capital Gains taxes into line with income tax, which would raise £37 billion and £90 billion respectively. Closing tax avoidance loopholes and tackling tax evasion would raise a total of £145.5 billion.

Approximately £490.9 billion in additional tax revenue could be raised over a period of 5 years and these are conservative estimates that take account of behavioural changes and administration costs.

This is money that could be spent on our neglected public services and vital national infrastructure. We could afford to plug the social care funding gap and to give our key workers a pay rise. We could reverse local government and education cuts. We could rebuild Britain into a dynamic Green economy that can compete with the best in the world.

In addition, these measures would also reduce extreme wealth inequality. Our political system has been rigged in favour of global corporations and the super-rich. The Pandora Papers have shown they play by a different set of rules to the rest of us. The next Labour government must put an end to this racket. The public expects nothing less.

Keir Starmer has said that he is looking into a Wealth Tax. My report shows how it could be achieved. This is a bold policy that will appeal to voters and unite the labour movement, precisely because it has our core value, fairness, at its centre.

Labour policy must be debated openly throughout our movement and cannot just be made in the backrooms of Westminster. I want my report to contribute to this debate. I will be leading a series of live discussion events in the coming weeks, which I encourage Labour Outlook readers to join.

Let’s be clear, a Wealth Tax is both morally and fiscally the right thing to do. It will help us to rebuild our country with the principles of social justice at its heart.