Rishi Sunak, the chancellor, is looking at ways to raise funds to repair the damage of coronavirus to the public finances. Last week the Wealth Tax Commission, set up by academics at Warwick University and the London School of Economics, proposed a one-off tax on personal wealth at a rate of 5 per cent that could raise £260bn. How realistic is this plan?
Gus O’Donnell, the former cabinet secretary who wrote the foreword to the report, quoted Sunak, who said in July this year: “I do not believe that now is the time, or ever would be the time, for a wealth tax.” Nevertheless, Lord O’Donnell urges ministers to keep an open mind, pointing out the lack of alternative good options.
He wrote that “it is broadly accepted” that taxes will eventually have to rise, and that the Conservatives are bound by manifesto promises not to raise income tax, national insurance contributions or VAT. If they are to put up taxes, he said, it means breaking those pledges, “or it means thinking seriously about new taxes”.
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