Labour history teaches us that wealth taxes don't work

Taxing unearned income is no way for the chancellor to plug her £41bn spending black hole – the better-off are the best placed to find a way around paying it, says Chris Blackhurst

- By Chris Blackhurst

On family holidays to Greece, we would look at the people living in unfinished buildings and revel in their laidback attitude. Except they weren't being laidback, of course. What they were doing was avoiding paying tax on a completed property. With their climate, they could leave the ground floor open to the elements.

Something similar occurred in England and Wales. Have you ever looked at old houses and wondered why they went to the trouble of putting in windows only to block them up? That was because in 1696 there was a window tax - the more windows, the higher the levy. So, they filled them in. Same in Scotland, where they removed the roofs to avoid property tax. That's why so many castles have fallen into ruin.

It will occur again if the left get their way and impose a mansion tax. Some bright spark will come up with a ruse for escaping the charge, probably finding a loophole in the precise definition and how it's phrased, and a scheme will take off and be heavily exploited. This is how it always is.

In every country in the world, the national sport is minimising tax legally. Going down the illegal route is different and dangerous. Doing it while remaining within the law is seen as fair game - at least for those who can afford to employ wealth advisers who specialise in bending the rules. Which is why the current push for the imposition of more taxes on the well-off will backfire.