A tax on Britain’s super-wealthy could raise £10 billion a year, according to academics who have called on Andy Burnham to “make tax fairer”.
Economic experts have claimed a 2 per cent charge on households with more than £100m in assets would raise a vast amount and affect less than 1,000 of the wealthiest households in the UK.
Authors of the report, professor of economics at the Paris School of Economics Gabriel Zucman and lecturer in economics and wealth inequality at King’s College London Ben Tippet, said the tax would “raise meaningful revenues and dampen runaway inequality”.
The new prime minister has hinted at tax reforms, with some of his closest aides and allies publicly having called for wealth taxes.
Mr Burnham himself has declined to rule out a wealth tax, telling former footballer and presenter Gary Lineker earlier this month that his government may “ask for a little more”.
The report, seen by The Guardian, outlines a plan which would see HMRC calculate the wealth of rich families, including assets such as property, private businesses and pension wealth, art, land and charitable assets to prevent tax avoidance.
The report authors argue the collection of data would not be costly for HMRC to attain as it is already underway.
“The report shows that a well-designed minimum tax on the very wealthiest households is a realistic, targeted reform that would make the UK’s tax system fairer while raising substantial revenues,” Mr Tippet said.
The report’s calculations are based on data collated by the Sunday Times for its annual rich list, and also calls on the government to force families to pay the tax for a decade after leaving the UK.
“The objective is not to create a broad-based wealth tax affecting millions of households but rather a focused tax on extreme wealth that can make billionaires pay the same tax rates as the rest, raise meaningful revenues and dampen runaway inequality,” the report said.
It adds: “Critics often point to the decline in the number of European wealth taxes since the 1990s as proof that wealth taxes do not work. However, most historical wealth taxes were fundamentally different from the proposal outlined here.
“They typically had relatively low thresholds, covered large sections of the population, and/or contained extensive exemptions for particular assets, in particular private business assets.
“These exemptions created avoidance opportunities, reduced revenues and generated political opposition from taxpayers who felt unfairly treated.
“The lessons from these experiences are clear. Wealth taxes work best when they focus on the very wealthiest households, apply to a broad asset base and are supported by strong administrative enforcement.”
In an interview earlier this month, Mr Burnham also suggested there is “some room” in the Labour manifesto for “movement on tax”. He has also declined to rule out introducing a wealth tax and suggested the government “might be having to ask for a little more” at some point to balance Britain’s books.
One of his closest allies and newly appointed cabinet minister Louise Haigh has also called for a wealth tax and equalising capital gains tax with income tax.
Explaining her views on capital gains tax in an article for leftwing Renewal magazine last month, she wrote: “This reform is central to restoring confidence that the system does not favour those able to structure their income over those earning through work.
“It would shift the taxation burden away from punishing work, and towards unproductive capital accumulation, which does little to grow the everyday economy.”
