Although you’re much more conservative than me I agree on the top rate of tax not rising. I also think we should be going back increasing the tax thresholds, thus stopping the stealth tax that governments of all persuasions seem wedded to, as it’s easy money.
However, if we want to maintain public services never mind improve them and improve productivity we will need to start thinking differently about raising revenues.
The super rich have been accumulating money at a faster rate than any time in history, whilst our public services have been decimated.
There are quite a lot of things we could do and we could do them quickly.
Reforming the tax system is top of the list as it’s currently riddled with loopholes that make no sense. Mr Sunak, for example, paid a true tax rate of 23% on earnings of £2.2M in 2023, a lower effective rate than many in this country.
Income tax raise about 50% of total government tax receipts, while taxes related to wealth, such as capital gains and stamp duty, bring in less than 5% of tax receipts, which doesn’t seem right.
A 2% tax on assets over £10M doesn’t seem hugely outrageous and would raise over £20B a year.
Reform CGT as ours is currently the lowest in the G7 and bring them into line with income tax rates.
Apply National Insurance to investment income. Currently National Insurance is paid on income from work but not investment, such as dividends from shares, rent from property, and interest on savings. This means that landlords who don’t have a mortgage, earning huge sums of money during a housing crisis, are paying a lower tax rate than their renters whose only income is from their job. This would simplify the tax system’s treatment of different types of income and ensure that income from wealth is taxed at the same rate as earnings from work.
Tax company buybacks at 4% as that would encourage firms to invest instead of funnelling cash into shareholders (and their own) pockets. The water industry is a great example.
Properly tax private jets, the biggest polluters in aviation.
Mandate that multinational businesses operating in the UK to publish a breakdown of exactly how much income, profit and tax they generate here and in all other countries – known as ‘public country by country reporting’ (pCbCR). The UK government agreed this was merited in 2016, but has yet to implement this power. Increasing numbers of nations are mandating pCbCR – from the EU to Australia – where there is evidence of reduced use of tax havens and profit shifting, and increased effective tax rates and domestic tax revenue mobilisation. The UK must follow suit – not just to raise significant revenue, but to restore its credibility as a global leader in tackling tax abuse.
Finally, properly fund and resource HMRC to simply tax, tackle tax abuse and unfair tax reliefs.
These are, of course, all things that the Labour Party could and should be advocating and yet they go after welfare, as usual.
