A cross-party group of 30 MPs has urged Rachel Reeves to impose a wealth tax on Britain's rich in next week's budget rather than announcing spending cuts that would hit the poorest hardest.
In a letter to the chancellor, MPs – including former Labor leader Jeremy Corbyn and his then shadow chancellor John McDonnell – say she could raise £24bn a year from a 2% wealth tax over £10 million and lay the foundations for a fairer and more sustainable economy.
Reeves is exploring ways to raise billions of extra pounds in taxes in the budget to cover a £40bn shortfall in government finances, needed to prevent a “return to austerity” or her breaking a self-imposed fiscal rule to balance the day. -Daily spending with tax income.
The Labor Party has pledged not to raise taxes on “workers” by increasing income tax, national insurance and VAT, and has promised to limit corporation tax on businesses to the current rate.
As an alternative, the chancellor has explored increasing existing taxes on wealth, including through inheritances and capital gains, but has ruled out a new explicit wealth tax.
But Labor signatories including Diane Abbot, the four Green MPs, the Liberal Democrats, Plaid Cymru, the Labor and Social Democrats and the Northern Ireland Alliance party, as well as independents, argue that wealth is not taxed. enough in the UK and a new tax on the rich would generate a “huge revenue stream”.
The letter, organized by campaign group Green New Deal Rising, says that, in contrast to the general trend, taxes on the richest are only slightly more onerous than in the mid-1960s.
“This is deeply unfair and immoral: in a period of climate and economic crisis, where public funds are desperately needed, we need to correct this imbalance. The transformative potential of extreme wealth taxes is clear and the appetite for them is growing.”
The chancellor's lobby by MPs coincided with the release of two polls showing a majority of voters would back an increase in wealth taxes to raise money to repair Britain's crumbling public sector.
Six in 10 people thought the government should prioritize raising more money through inheritance tax reforms rather than cutting public spending in the budget, according to the survey of more than 2,000 people by Opinium for the group. from center-left experts Demos.
And just one in 10 people said spending cuts should be prioritized. The strongest support for the inheritance tax reforms was among Labor voters, at 74%, but a majority (53%) of Conservative voters also backed the changes being made.
A separate poll by Opinium of more than 3,000 adults, commissioned by the Trades Union Congress (TUC), found that 62% of voters were in favor of asking those “with broader shoulders” to pay more tax. By contrast, only 12% thought that taxes on the rich should not increase even if it meant worsening public services.
Paul Nowak, TUC general secretary, said: “The chancellor should be encouraged by the level of public support – across the political spectrum – for creating a fairer tax system.
“Voters want those with broader shoulders to contribute more, especially at a time when our schools and hospitals are under so much pressure.”
The TUC said there was also support for Labour's overt tax rise. It said 79% of voters backed reducing NHS waiting times and increasing appointments by tackling tax evasion and no-dom loopholes, while 65% supported ending exemptions. taxes for private schools to pay new teachers.
Proposing a package of inheritance tax reforms, Demos said around £2.6bn could be generated in the current financial year, or around £16bn more than parliament. The changes include a proposal to reduce the current tax on inheritances above the tax-free allowance from 40% to 30% for inheritances of less than £1m, but an increase to 45% for those over £2m. million pounds.
Dan Goss, senior researcher at the think tank, said: “With a rate cut for working families and reduced tax breaks, this proposed package would almost double support for the inheritance tax. And no matter which party voters voted for this year, a majority say the government should prioritize reforms over equivalent spending cuts or borrowing.
“Research shows that there does not have to be a balance in fiscal policy between raising revenue and attracting support. “The government could win public support for reforms if they make the system fairer, and our proposals would do just that.”
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