What is a wealth tax – and would it work in the UK?
The potential issues with a wealth tax in the UK
- Rachel Reeves, the Chancellor, is under pressure to find at least £22bn for the upcoming Budget due to rising borrowing costs and weak growth, potentially necessitating tax increases.
- She has not ruled out breaking Labour's manifesto pledge against raising taxes for working people, indicating that an income tax hike could be on the table.
- Campaigners propose a 'wealth tax' on ultra-rich individuals, with Tax Justice UK suggesting a 2% levy on assets over £10 million to generate £24bn annually and reduce economic inequality.
- Economist James Meadway supports a wealth tax, arguing it would fund public services and address wealth concentration, while dismissing concerns about its impact on investment.
- Conversely, tax expert Dan Neidle warns that a wealth tax could trigger capital flight, significantly damage the economy by discouraging savings and investment, and lead to a reduction in GDP.