The Wealth Tax Commission has argued that a one-off ‘wealth tax’ could raise “substantial revenue” for the UK economy after public finances and the tax system have been challenged by the pandemic.
In a report, the group stated that the tax would be paid by individuals whose “total wealth” after mortgages, other debts, and after splitting the value of shared assets such as a jointly-owned family home, exceeded the tax threshold.
As an example, the commission said that a wealth tax levied at 1% above £500,000 would require a couple to have a “net wealth of more than £1m before any wealth tax would be payable”.
According to the group previous surveys have found high levels of support for a wealth tax, but these proposals excluded the two forms of wealth that individuals were most likely to possess themselves: main homes and pensions.
A poll conducted by YouGov in May 2020 found that 61% of adults would support an annual wealth tax on assets above £750,000, while 14% were opposed.
Lord Gus O’Donnell, former permanent secretary to HM Treasury said: “The recent spending review highlighted the extent to which our public finances and our tax system have been challenged by the COVID crisis.
“It is broadly accepted that if the prime minister is to stand by his promise not to return to austerity then taxes will eventually have to rise. This will mean breaking another manifesto commitment by raising income taxes NICs or Vat . Or it means thinking seriously about new taxes.”
He added: “In the aftermath of a crisis, difficult choices need to be made and there is probably more public acceptance of the need for change than in normal times. We have seen with climate change that ducking tough choices today leads to even tougher choices tomorrow.”