Friday 31st August
So, the silly season is over and serious politics has returned. Or has it? Is Nick Clegg’s recent conversion to and espousal of a wealth tax a serious attempt to alter Coalition tax policy or just a crumb to the poor beleaguered troops of the Lib-Dem party? Difficult to say, and maybe a bit of both I suspect. And of course, George Osborne has already come out against it, as has most of the City and (why are we surprised) the wealthy too.
But laudable or not as the idea may be, it is fiendishly difficult to put into practice. The reality of the situation is that the super-rich will always avoid paying tax, and can afford to have experts to advise them how to do it. The burden almost always falls on those in the middle, however you define that. And by the way how can Nick demand the rich pay more when he agreed to the reduction in top rate tax just 6 months ago. He is now dead meat electorally, and the Lib-Dems only chance at the next election is to ditch him and choose a leader not so tainted with broken promises.
However, how to raise more money from the rich; well, there are a few ways, but they will be limited in revenue raising and may still be avoided by those with clever accountants. One way would be to change the formula used by councils to calculate council tax, allowing them to charge a much higher rate for larger value homes, though this would surely have to be in conjunction with a change in the valuation system which is years out of date. But this would allow councils to raise more in council tax, while keeping the level for most homes about the same. You could also have a financial transaction tax, levied both on companies and individuals for any transactions over, say £100,000. This would have to be fairly low, say half a percent, but have no exceptions, so that salaries and large purchases would be included. Companies could reclaim the tax if the purchases were for re-sale or for investment.
But I fear that until we are able to devise a system where ALL financial transactions are monitored by Government computers this may still be difficult. A police state?
So, a wealth tax, what a splendid idea; but like eradicating poverty or stopping war slightly hard to implement.