Would a wealth tax really solve Britain's problems?

Not so long ago, when Labour was in opposition and still popular, there was no question of introducing a wealth tax. Yet today, influential figures such as former leader Neil Kinnock and ex-first minister of Wales Eluned Morgan, and some trade unions, are advocating just such a change.

- SEAN O'GRADY

More tellingly, ministers simply refuse to rule out a wealth tax as they might have done before. The latest to do so is the transport secretary, Heidi Alexander, who was asked if the topic had come up at last Friday’s cabinet away day and enigmatically replied: “Not directly.”

Teased at Prime Minister’s Questions on the subject, even Keir Starmer couldn’t bring himself to issue a flat denial. Some wonder if a wealth tax could actually happen...

What did Labour promise?

There’s nothing in the manifesto to rule out a wealth tax, but in an interview in August 2023, Rachel Reeves was unequivocal. “We have no plans for a wealth tax. We don’t have any plans to increase taxes outside of what we’ve said. I don’t see the way to prosperity as being through taxation. I want to grow the economy,” she said, adding: “We won't be doing that. It’s a denial.”

And as recently as her spring statement in April, she declared: “We’re not interested in a wealth tax. Our priority is to grow the economy, and that’s the way that you make working people better off and secure better public finances.”

What does the left want?

It’s usually stated as a 2 per cent levy on assets - property, shares, art etc - owned by individuals in excess of £10m. For example, someone worth £12m would pay a levy of 2 per cent of £2m - a bill of £40,000. It could be paid immediately, or deferred to disposal (or death). Figures such as Richard Burgon, a left-wing MP who believes in it, says it would raise “up to” £24bn.

What does the chancellor say?

As little as possible at the moment, suspiciously sticking to the “working people” line (though some working people are worth £10m, and more). No denials, then.

What are the arguments for a wealth tax?