The days leading up to budget statements are always filled with unknowns.
Politicians have no idea what is in the Chancellor’s speech when he steps up to talk in the House of Commons, let alone people up and down the country.
But there are always rumours, and this week is no different.
Reports suggest Jeremy Hunt’s Autumn Statement this week could include personal tax cuts, either to national insurance or to income tax.
But cutting taxes on the one hand, only to slash people’s benefits with the other – as media coverage suggests is on the cards – is cynical and dangerous.
Hunt is right to be looking at how much tax is being paid, on what and by whom. But I believe that more tax isn’t something to fear. That doesn’t mean hitting the poorest with more – but by targeting it at the right people – the wealthiest.
Let’s start with the facts. It’s true that much of the general public is facing taxes by ‘stealth’ with thresholds for income tax and national insurance frozen – meaning that with inflation being so high, those on lower incomes are being dragged into higher tax brackets.
But that means that by failing to increase taxes at the top end, Hunt is rewarding the wealthiest at the cost of those on lower incomes.
Jeremy Hunt, like Tory Chancellors before him, misses the point, we don’t need stealth taxes, we need wealth taxes.
In order to redistribute wealth, mend our broken public services and tackle the climate emergency, we need to spend more.
To do that, we need to tax people more. But the right people, in the right way.
Put simply, a wealth tax means those with the broadest shoulders would bear the heaviest responsibility – exactly how a compassionate society should function.
Wealth is significantly under-taxed in the UK – recent research suggests that from 2011 to 2020, the average tax rate on income was 32.9%, while increases in wealth were taxed at just 4.1%.
In terms of taxing wealth, there’s a whole array of options for Ministers to choose from.
Taxing capital gains, like profits from selling off assets, in the same way as income from work, could, research suggests, raise between £12-16billion, while another £18billion could potentially be generated by reintroducing a tax on unearned income like investments.
While small businesses have been struggling with rising costs, big corporations have been raking in record profits. So increasing the rate of corporation tax from 25% to 30% would not only help level the playing field, but could raise more than £6billion a year.
Whichever options you take, the fundamentals remain the same. In such an unequal country, it’s the richest who need to pay their fair share. And that share needs to increase, fast.
In the country boasting the sixth largest economy in the world, the scale of poverty in the UK is shocking.
More people than ever are reliant on food banks; the number of people in temporary accommodation in England has hit a new record this summer, and one in four UK households living in social housing suffered from fuel poverty last winter.
Wealth taxes have never been more urgent, to help redistribute some of that wealth from those who need it least to those struggling, rather than the other way round.
The poorest in society rely on public services more than anyone else. And in this era of austerity, our public services desperately need mending – not slashing even further.
The NHS is on its knees, services have been cut to the bone, and something as simple as securing a dentist appointment has proved virtually impossible for some of my constituents.
Fortunately, wealth taxes can raise huge amounts of revenue to help fund the things that benefit us all.
The unfairness of our tax system isn’t just perpetuating economic inequality – it’s accelerating the climate emergency too. It was revealed this week that the richest 1% globally account for more carbon emissions than the poorest 66%.
Earlier this year, Hunt had the audacity to criticise Joe Biden’s green subsidies in his game-changing Inflation Reduction Act, when, writing that ‘the long-term solution is not subsidy but security’. So why is the Government willingly handing out billions a year in tax breaks and subsidies for fossil fuel exploration and research?
The Chancellor is right to be wary of hitting the worst off with even more tax. And I know the idea of new or increased taxes rightly worries the vast majority of people.
But wealth taxes won’t target them – they’ll target big corporations and mega-rich individuals who are benefitting from the current system while others live in poverty.
This week, I’m urging Hunt to take steps to improve his popularity with the people, with a move that makes fiscal and political sense.
It’s time to tax wealth fairly.
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