30 millionaires from across the UK are pleading with the British government to pass a wealth tax, legislating that the top 1% of households foot the bill for Covid-19.
In an open letter to Chancellor of the Exchequer Rishi Sunak, the Partners in Progress made of 30 high-net-worth individuals, asks for a more progressive system of taxation. This, if passed, would see the group of UK wealth holders paying a higher tax to reduce the immense pressure on the treasury to deal with present and future crises.
The letter written in a bid to reduce inequality, support stronger social care and build a green and just society is not a ‘letter of goodwill’ according to one signatory. It is, she described, ‘an attempt to shake the chancellor by the fiscal shoulders’ and avoid the young or lower-paid communities from being hit the hardest from the 1.25% hike in national insurance announced on Wednesday.
But is the move selfless or selfish?
On a very individual level, the offering to pay a greater share of tax due to their higher income is incredibly selfless. Here you see a group of 30 high-net-worth individuals volunteering their money to take the burden off of a younger and lesser-paid demographic who are suffering greatly following the pandemic.
They are hoping to not just make change today but transform tomorrow’s economy which, in their opinion is deliberately designed to favour the richest at the expense of everyone else. On the surface, it appears to make financial sense too.
A wealth tax on the top 1% of households in the UK worth over £3.6M could generate more than £70BN a year. Similar taxes are already in place in Argentina, Bolivia and Morocco to name a few but does the set precedent deem it fair?
250,000 households would be eligible for the higher tax band if a wealth tax was introduced in the UK of which just 30 are backing the change – 0.012% of the affected demographic. Is it fair for them to speak on their fellow wealth holders behalf?
Based on the current democratic system in the UK, the answer is firmly no.
A petition requires 100,000 signatures before being considered for debate in parliament. That equates to 0.14% of the population of the UK and even then, an appearance in the commons is not guaranteed. The UK government reserves the right to decline a petition if the issue has already been debated or there is a debate scheduled for the future and the wealth tax is not a new conversation. It has in fact already been dismissed by Boris Johnson and Rishi Sunak but that was before the UK stacked up more than £2.2TRN in debt.
Taking selfishness or perhaps selflessness out of the conversation and it seems this move is not just about inequality but also the greater British economy. The Partners in Progress group believe that if the fiscal burden is placed on low-income key workers, a strong and stable recovery will be impossible creating wider and worse ramifications for the UK economy.
However according to world leaders following the first world war when the debate was first ignited, a wealth tax is both distortive and less equitable than other forms of taxation such as capital gains tax. The Organisation for Economic Cooperation and Development supported this by stating that the unfairness of wealth taxes comes from the fact that if levied regularly, payments are required even if the taxpayer has not earned any return on underlying assets which would have a negative impact on the British economy.
Do you believe inflicting a wealth tax on the wealthy without the consent of all impacted parties fair or the right solution?