In addition to Keir Starmer’s vague support and campaigns from organisations such as Tax Justice UK and UK Wealth Tax Commission, the British public also voiced their approval for introducing a wealth tax for high-worth individuals.
Moneyzine.co.uk reveals that 73% of Brits would support a 2% tax on wealth over £5 million, while 78% support 1% on wealth over £10 million. The figures have drawn bilateral support with similar proportions of Labour and Tory voters providing their seal of approval.
Higher amounts garner the most support
While the introduction of some sort of taxation to high-worth individuals is generally favoured, the support decreases with the threshold.
Three-quarters of Brits would approve taxation for wealth above £5 million, and almost 8 out of every 10 backs a threshold of £10 million – but only about 53% of those surveyed looked favourably upon a one-off tax of 1% on wealth over £500,000 for five years.
The proportion of Labour and Tory supporters were similar for thresholds £5 million and £10 million, with 69% of Conservative voters and 83% of Labour voters supporting the former and 77% of Conservative voters and 86% of Labour voters supporting the latter.
The biggest discrepancy between individuals with different political affiliations was regarding the £500,000 threshold: Conservative responses were divided between 45% and 41% in favour and against, whilst 66% of Labour voters voiced their approval.
What would be the real impact?
A separate survey revealed that 18% of the public believes wealth tax is required to raise money for public services, while more than 1 in 5 believe tax revenue can be used to fill the hole in public finances caused by the pandemic. A further 12% think it may help relieve the tax burden on future generations.
According to the Wealth Tax Commission’s report, introducing a 2% tax on wealth over £5 million can generate a revenue of £250 billion over five years – which accounts for roughly 8% of the UK’s GDP, and could cover NHS expenses for more than a year and a half, as per the 2022/23 budget. The portion of the public that would be liable for this would include roughly 83,000 individuals, 60% of which are above the age of 55.
What is the international experience like?
A study conducted across countries by Organisation for Economic Co-operation and Development (OECD) revealed that six out of 10 residents would like their government to bridge the gap between poor and rich through means of more rigid taxation, with 80% believing that wealth redistribution is the government’s responsibility.
Several of 38 OECD member countries levy wealth tax; many implemented and repealed over the years. Switzerland is one of the most successful countries in continuing wealth taxation.
The Swiss wealth tax was implemented in 1840 and the rates vary across cantons greatly with a maximum of 1%. As it stands now, 1% of Switzerland’s GDP is raised through wealth taxation; overall, it accounted for 5.12% of the country’s tax revenue. The UK can achieve a similar figure (raising 0.5% of the total GDP) by implementing 0.91% taxation on wealth over £5 million to gain a revenue of roughly £10 billion per year, which would cover 6.54% of the NHS yearly budget.
It’s not surprising ¾ of the public support a wealth tax. The last decade has seen an appalling widening of the gap between social classes, when topped with the ongoing cost of living crisis and subsequent decrease in the quality of life, the country wants fairness above all.Jonathan Merry, CEO of Moneyzine.co.uk
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