It’s time for the government to stand up to Britain’s selfish rich, says Matthew
“It’s time for our government to get serious about shared sacrifice” – Warren
Liberator articles don’t often start with a quote from a fat cat, but this one
from the world’s third richest man is spot on today, in Britain as much as
His point is that capital is taxed much more lightly than income – his effective
tax rate at 16% is only half the average for US taxpayers. Many of France’s
business leaders and wealthy have called for an exceptional contribution from
the wealthiest taxpayers to show solidarity and help close the deficit in the
But Britain’s super rich are super selfish in a world of their own – not a peep
from them about shouldering their fair share of the burden of rebuilding our
economy, after the boom that made so many of them their fortunes.
All we hear is an endless whine about the disincentives from our so-called high
rates of tax, with the 50p rate on taxable incomes over £150,000 their top
target. This is encouraged by a steady stream of noises from the Treasury, and
Tory ministers suggesting, that this raises very little extra tax, well before
any evidence is produced to justify that highly improbable assertion.
Eric Pickles, as ever the real unacceptable face of Conservatism, has said he
wants to abolish the 50p rate and put nothing in its place – no mansion tax, no
wealth tax, no reformed council tax. He really is the fat cats’ friend when he
sees nothing wrong with a banker in a £30m mansion paying just £5 a week in
property tax – the same as for many suburban semis. Never mind the poor, this
isn’t even standing up for Middle England.
It’s high time we put fairness back at the centre of our economic policy – it’s
there on the front of our coalition agreement.
But when did you last hear a Conservative stress it? We’ve made a good start
taking the lower paid out of income tax, and getting the tax threshold up to
£10,000 by 2015 must be a Lib Dem ‘must do’ – an achievement that we can sell
with pride, knowing that it helps millions. Somehow, the rich forget incentives
matter even more at the bottom than at the top, and the lower paid face
mountainously high effective tax rates.
But we’ve bottled out on real action to end the array of abusive tax dodging
scams by the rich, and HMRC is hopelessly overstretched and ill-managed.
There are still far too many coach and horses-sized tax loopholes for the rich,
and their accountants, to drive through while the taxman struggles behind. A key
way to ensure that higher-rate income tax raises serious money is to limit tax
relief for pension fund contributions to the standard rate. Why should 300,000
people – the top 1% – get a whacking great subsidy from ordinary taxpayers?
There are two pieces of serious unfinished business from George Osborne’s first
budget if he is serious about making the rich pay their fair share.
He let non-doms off the hook. By letting them bring any money they want into
Britain tax-free, they now have the best of both worlds, by letting the income
and capital gains roll up offshore while getting all the benefits of living in
Britain for a nominal flat charge, a mere flea bite.
In his 2007 Tory conference speech, Osborne claimed this would raise £3.5bn a
year to cut inheritance tax and stamp duty. In fact, last year it raised just
£168m, only 5% of his claim. It must have been the biggest con ever in a
Conservative speech – not an award to be made lightly. We Lib Dems have a single
non-dom policy – after seven years here, you pay full British tax on all your
worldwide income and assets or you’re out – it’s only fair. No other civilised
country gives this outrageous tax bonanza.
On stamp duty, the Chancellor highlighted the widespread abuse at the top end of
the market, where almost all owners of properties over £5m get away with stamp
duty at 0.5% instead of 5% by packaging them up in companies, but he did
precious little to stamp out the abuse.
Strip away the sham companies and charge full stamp duty on the property inside
the wrapper. And if ownership is hidden offshore, charge a stiff annual tax on
the capital value of the house, until the real owner is revealed!
Catching the millionaire stamp duty dodgers is a simple test of fairness
because, as with a mansion tax, you can't move your property offshore to dodge
stamp duty if it’s properly enforced. We must also end the scandal of foreigners
and non-doms dodging capital gains tax on their British properties by hiding
them in tax havens.
There’s far more for any government to do to make Britain a fairer country. But
getting to grips with these scandalous abuses in our tax system would be a great
start – and show the world it’s not only America and France where the rich can
be made to pay their fair share for the common good.
Britain is crying out for a government that stops cringing to bankers’ and
Matthew Oakeshott is a former Liberal Democrat Treasury spokesman in the House
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