‘Modest’ wealth tax could raise more than £10bn for public services, says TUC | TUC

A “modest” wealth tax on the richest 140,000 people in the UK could raise more than £10bn to help pay for public services, according to the Trades Union Congress, which is calling for a “national conversation about taxing wealth”.

Research commissioned by the union umbrella body found that a “one-off wealth tax” of 1.7% on those with assets above £3m, rising to 3.5% for those with more than £10m, “could deliver a £10.4bn boost for the public purse”.

The TUC said the proposed levy would only affect the wealthiest 0.3% of the UK population, and would not be extended to pension funds or pension income.

The body, which brings together 5.5 million working people from 48 member unions, said increasing wealth inequality was resulting in a “tale of two Britains”.

It said: “While working people have been hit by a pay loss of historic proportions after the longest wage squeeze in modern history, the wealth of multimillionaires and billionaires has boomed.”

The number of UK billionaires has increased sharply since the coronavirus pandemic, from 147 in 2020 to 171 this year, each holding, on average, about £4bn. There were 15 UK billionaires when the Sunday Times first published its rich list in 1990.

The TUC’s general secretary, Paul Nowak, said: “It’s time to start a national conversation about how we tax wealth in this country.

“It is absurd that a nurse pays a bigger share of their income in tax than a city trader does on profits from their investment portfolio. That’s not only fundamentally unfair and unjust – it’s bad for our economy, too.

“Our broken tax system means those at the top are hoarding wealth and getting richer and richer, while working people struggle to get by. That is starving our economy of spending – as it’s working people who spend their money on our high streets – and it’s starving our public services of much-needed funds.”

Nowak said the TUC was not yet officially proposing the introduction of a wealth tax but setting out “potential options for getting those with the broadest shoulders to pay a fairer share”. Policy on any tax would need to be voted on by members.

“This is a debate we should not be afraid of having,” Nowak said. “The chancellor should use his autumn statement to make sure the wealthiest pay their fair share of tax.”

The research suggests the idea of introducing a tiered one-off wealth tax that would not include pensions wealth. The following was raised:

• People with more than £3m would be hit with a marginal tax rate of 1.7%, which the TUC said would yield £2.7bn for the public purse.

• On assets above £5m the tax rate would rise to 2.1%, raising another £3.2bn.

• Above the £10m threshold the rate would rise to 3.5 %, raising £4.6bn.

The TUC’s study, which was carried out by Landman Economics, is based on Spain’s new “solidarity tax on large fortunes”. Wealth taxes have also been introduced in Norway and Switzerland. Norway’s 1.1.% tax on those with assets above 20m Norwegian kroner (£1.5m) has led to a record number of super-rich people leaving the country.