Reducing budget deficits and tackling inequality with a one-off wealth tax
The Panama Papers have put questions of wealth, tax and inequality right back at the top of the political agenda. In ‘A Unique Contribution’, Nick Donovan calls for a one-off levy on the passive worldwide wealth of Britain’s super-rich, which takes a more stringent approach with those who have used tax havens or domestic tax avoidance schemes. The proposal is introduced by Dan Jarvis MP, author of the report’s foreword.
The report argues a one-off levy would be a much fairer way to pay down the deficit than the chancellor’s continued programme of public spending cuts, and would also address growing public concern about spiralling inequality.
Key features of the ‘unique contribution’:
- The unique contribution would apply to long-term residents of the UK with net wealth over £10 million. A second, higher, rate would be charged on net wealth which exceeds a threshold of £20 million
- ‘High risk’ tax payers – non-doms and those who have used aggressive tax avoidance measures or funds from tax havens – would undergo a full, stringent valuation exercise. ‘Low risk’ taxpayers would be eligible for a non-intrusive assessment of their unearned wealth based upon past declared unearned income
- Revenue from the tax would be used to reduce the deficit, thereby easing pressure on spending cuts and taxes on income and earnings.
- It would be a one-off rather than ongoing charge, avoiding any of the economically distortionary effects and political obstacles sometimes ascribed to annual wealth taxes.
The online annex is made up of worked examples of how the tax would operate in practice for a range of (illustrative) taxpayers. Download »»