#033 Tax The Fat Cats

Twelve Tax Changes For Real Progressive Change

On the 17th November 2022 Jeremy Hunt MP, the latest conservative chancellor of the exchequer, will release a package of spending cuts & tax rises, which, in all likelihood, will fail to address the ongoing cost of living crisis in Britain and lead to a whole new round of damaging and unnecessary austerity.

Hunt, recently appointed to the position of Chancellor by Prime Minister Liz Truss, has already made significant reversals to the decisions of Truss’s first chancellor, Kwasi Kwarteng MP, following Kwarteng’s disastrous and short lived time in the job.

The most significant of these reversals was Hunt’s decision to cancel Kwarteng’s cancellation of the rise in corporation tax, from 19% to 25% (for company profits above £50k), meaning the conservative party will now stick to the earlier decision to increase the tax on business profits in April 2023.

This new corporation tax rate should be welcomed. It is in line with the corporation tax rates many other countries currently employ and it is significant in that it hopes to raise somewhere in the region of £18 billion, which will help reduce debt as a share of the economy. This move also suggests even the conservative government accepts that significant amounts of revenue can be raised through increasing taxes on those that hold wealth & capital in Britain.

Jeremy Hunt MP reverses ‘almost all’ of the tax cuts of the prior ‘mini-budget’ (October 2022)

With this in mind, here I propose a further twelve tax policies, in no particular order, that could be enacted by the U.K. government today, in place of the damaging spending cuts it likely has planned, to raise much needed revenue, fairly and progressively.

1. Tax personal wealth & capital intelligently,
   eg, 1% over £5 million and 2% over £10 million in net assets
2. Institute a land value tax or a proportional property tax on commercial property, to replace business rates, and change the system of council tax on residential property to be more progressive
3. Tighten up inheritance tax loopholes and lower the tax free thresholds promoting a more meritocratic society
4. Turn employee paid national insurance into a progressive tax by taxing the higher tax bands at higher rates, e.g.,
   - keep basic N.I. rate at 8%, taxed on income between £12'570 and £50,270
   - change the N.I. rate on income earned between £50,270 and £125,140 to 10%
   - change the N.I. rate on income earned above £125,140 to 12%
5. Increase the rate of employer paid national insurance to 15% and decreasing the threshold at which business pay National Insurance (with help for small business via the Employers N.I. Allowance)
6. Refine the income tax rates to be more progressive, e.g.,
   - keep basic income tax rate at 20%, taxed on income between £12'570 and £50,270
   - change the income tax on income earned between £50,270 and £125,140 to 33%
   - keep the high 45% rate for income earned above £125,140
7. Apply national insurance tax to investment income
8. Tax dividends at the same rate as income (eg, 20%, 33% & 45%)
9. Tax capital gains at the same rate as income (eg, 20%, 33% & 45%) (making allowances for inflation over time)
10. Institute an online sales tax
11. Scrap the “non-dom” regime for those living in Britain
12. Tax large lifetime gifts over a threshold (say £1Million)

‘The Case for a Wealth Tax’ (Financial Times)

https://taxjustice.uk/blog/close-5-tax-loopholes-to-raise-over-7-billion-a-year/

Economist Richard J. Murphy