How do we improve our tax take?

growstuff

David49

Most wealth is held as property or shares, shares are already taxed. Property is taxed through the rates system and then again when it is sold (except domestic), the system is already in place to change taxation of property. I’m not sure that an increase would yield much extra, if property were less attractive to own, value would fall and less CGT would be made.

A fall in property prices would mean that more people could afford to buy rather than rent. Making property less attractive to own as an investment would lead to a fall in prices and would redistribute asset wealth.

Macro-economics doesn't always have to be about total increases, but also equality and the distribution of wealth.

Agreed it would reduce the rise in property prices, but if property taxation increased would the home owner be any better off. The house might cost less but the annual rates would be higher, there would need to be reliefs at the lower end, but what about the retired couple living in a £1m house.

A wealth tax is attractive from an idealogical viewpoint which may make it a contender at the next budget.

Taxing extremely rich is counter productive. Owning property will always be a better proposition than renting, Young people find it impossible to rent and save for a deposit, the lucky ones have help from mom and dad, the rest its so hard tor them. . The class divide is getting wider. The low paid should have a higher tax allowance. We need more people in work paying into the system.

A very easy question to answer. Encourage people to work. This government needs to wake up and realise that!

What is ‘counter productive about taxing the extremely rich, ‘*Allsorts ?*

Apart from a brief period from post WW2 ‘til the late 1970s it’s never really been done, so how do we know it’s ‘counter productive’?

Agreed it would reduce the rise in property prices, but if property taxation increased would the home owner be any better off. The house might cost less but the annual rates would be higher, there would need to be reliefs at the lower end, but what about the retired couple living in a £1m house.

But there isn’t any ‘property taxation’, David, apart from Council tax, which is a local, not a national tax and which is nominally based on very outdated house valuations, so I don't quite understand what your point is.

MaizieD I think stamp duty is classed as a property tax.

It increases on additional properties.

GrannyGravy13

MaizieD I think stamp duty is classed as a property tax.

It increases on additional properties.

Yes, but it's a one off tax on properties over a certain value, isn't it? Reduced property prices would reduce the amount to be paid.

But David is talking about ongoing property taxation, which, AFAIK, doesn't exist. Unless Council tax, which has nothing to do with current property prices, is counted as a national tax take...

MaizieD

GrannyGravy13

MaizieD I think stamp duty is classed as a property tax.

It increases on additional properties.

Yes, but it's a one off tax on properties over a certain value, isn't it? Reduced property prices would reduce the amount to be paid.

But David is talking about ongoing property taxation, which, AFAIK, doesn't exist. Unless Council tax, which has nothing to do with current property prices, is counted as a national tax take...

OK I see.

I am not in favour of an ongoing property tax, many people struggle to get on the property ladder and with all the associated costs of being a homeowner.

How would it be administered, in my opinion it would probably cost more to administer and police than revenue brought in.

There is an obvious way to bring in more tax, but no government has the cajones to do so. Go after the big corporations, Amazon, Starbucks, etc.

I don't know why they don't (go for the big corporations). I think it would be a popular move, and if (eg) Starbucks pulled out of the UK there would be plenty of others glad to step in in their stead.

Doodledog

I don't know why they don't (go for the big corporations). I think it would be a popular move, and if (eg) Starbucks pulled out of the UK there would be plenty of others glad to step in in their stead.

I think they don't go for big corporations partly because the corporations somehow manage to post their profits in foreign jurisdictions where the UK tax authorities can't touch them and partly because it costs a fortune, which HMRC doesn't have, to pursue them.

It always amuses me when people complain about Amazon escaping being taxed on its profits in the UK, but still go on insisting that their lives would come to an end if they couldn't buy from Amazon (and contribute to those vast profits)

I must emphasise that I am not pointing a finger at you or GG13. It's a general observation.

Council Tax is of course property taxation as are business rates, like all taxation they are politically sensitive, it would be easy to surcharge council tax so that the owners, rather than tenants were liable.

However because rents are regulated by supply and demand any increase would get passed on, it’s going to be many years before there is a surplus of housing.

Any suggestions on what threshold a wealth tax should apply?

MaizieD I am guilty as charged, I swore blind I would never buy from Amazon, then Covid happened.

I could of course do without it now, but it is far too convenient for many things.

David49

Council Tax is of course property taxation as are business rates, like all taxation they are politically sensitive, it would be easy to surcharge council tax so that the owners, rather than tenants were liable.

However because rents are regulated by supply and demand any increase would get passed on, it’s going to be many years before there is a surplus of housing.

Any suggestions on what threshold a wealth tax should apply?

I would say anything over £5 million.

GrannyGravy13

David49

Council Tax is of course property taxation as are business rates, like all taxation they are politically sensitive, it would be easy to surcharge council tax so that the owners, rather than tenants were liable.

However because rents are regulated by supply and demand any increase would get passed on, it’s going to be many years before there is a surplus of housing.

Any suggestions on what threshold a wealth tax should apply?

I would say anything over £5 million.

That’s less that 1% of the population.

Many countries have tried and abandoned wealth taxes, taxing 1% of the population is never going to collect much revenue.
Switzerland does have a wealth tax, it starts at a very low level from 100k CHF rises to 0.5% at 5m CHF. It operates at canton level and includes pensions as wealth.

UK wealth tax would have to start at well below £1m to make a significant difference.

David49

GrannyGravy13

David49

Council Tax is of course property taxation as are business rates, like all taxation they are politically sensitive, it would be easy to surcharge council tax so that the owners, rather than tenants were liable.

However because rents are regulated by supply and demand any increase would get passed on, it’s going to be many years before there is a surplus of housing.

Any suggestions on what threshold a wealth tax should apply?

I would say anything over £5 million.

That’s less that 1% of the population.

Many countries have tried and abandoned wealth taxes, taxing 1% of the population is never going to collect much revenue.
Switzerland does have a wealth tax, it starts at a very low level from 100k CHF rises to 0.5% at 5m CHF. It operates at canton level and includes pensions as wealth.

UK wealth tax would have to start at well below £1m to make a significant difference.

Starring a U.K. Wealth Tax at below £1 million is ridiculous.

There is such a large disparity from North to South, that would be tantamount to a tax on London and the Home Counties.

Hmm.

I asked ChatGPT (it's proving useful) what was the combined wealth of the top 1% of wealth holders in the UK. It didn't find a definitive figure, I think because data is sparse, but this was its conclusion:

^ *ONS direct data (more reliable but conservative): top 1% = ~10% ≈ £1 trillion+.^

*Adjusted figures (accounting for underestimation): top 1% could hold 18–23% of total wealth ⇒ roughly £1.8–£2.3 trillion.

It also says

__the most concrete estimate is around £2.8 trillion, held by a relatively small number of high-net‑worth individuals (~685,000), representing 10% of all household wealth in Great Britain.

The top 1% of UK households hold 10% of all household wealth in Great Britain.

On an individual level, around £2.8 trillion (~$3.4 trillion) is concentrated among them.

Each of these households is worth at least £3.1 million.

There is slight confusion between households and individuals here, though I think that the number of households in the top 1% must be more than the number of individuals because a household probably comprises more than one individual.

But, whatever way you look at it there must be a vast amount of under taxed or untaxed wealth in the UK and I cannot see that it would be politically damaging for a government to seek to increase taxes on this wealth. After all, there are millions of people in the rest of the population who would be unworried by such taxation, or greatly approve of it.

And, bear in mind, (referring to my long post earlier) a great deal of this wealth originates from the money that the government 'creates' by spending it into the economy and which inexorably trickles, or, indeed, flows upwards and is not recovered by taxation.

If that lowest estimate of £1.2 trillion were subject to a 2% tax it would produce £24 billion. 'Black hole plus' without bothering the rest of the UK population

MaizieD

If that lowest estimate of £1.2 trillion were subject to a 2% tax it would produce £24 billion. 'Black hole plus' without bothering the rest of the UK population

Far better option than going after the easy target of the middle income PAYE sitting ducks

GrannyGravy13

MaizieD

If that lowest estimate of £1.2 trillion were subject to a 2% tax it would produce £24 billion. 'Black hole plus' without bothering the rest of the UK population

Far better option than going after the easy target of the middle income PAYE ^sitting ducks^

The black hole was neatly filled with an employers NI increase, much quicker and easier.
My guess is that business owners who have got to pay that are very much part of the 1% wealthy. Most of the wealth is tied up in property, other business assets and shares, taking £24 billion is just a dream

It’s just come to my attention that high earners are relocating to Dubai which is a tax free haven with excellent international schools and outstanding medical care. Crime rates are low. Air conditioners are essential.
My observation is that for a certain group of highly taxed families the UK is a very unwelcoming proposition. I wonder when this government will come to its senses if ever ….

Most of the wealth is tied up in property, other business assets and shares, taking £24 billion is just a dream

Nonetheless, it generates income and is comparatively lightly taxed, When it is calculated that the very wealthy pay only about 4% in tax another 2% wouldn't hurt them.

I was joking about the 'black hole'. But when the government is scrabbling around trying to 'save' money by cutting welfare spending it looks as though an extra £24 billion wouldn't come amiss and would fall on the shoulders of those most able to bear it...

ronib

It’s just come to my attention that high earners are relocating to Dubai which is a tax free haven with excellent international schools and outstanding medical care. Crime rates are low. Air conditioners are essential.
My observation is that for a certain group of highly taxed families the UK is a very unwelcoming proposition. I wonder when this government will come to its senses if ever ….

I know two families who have relocated to Dubai since the last election. Another is on the process of moving over there.

The point is that the ones most able to bear it don’t necessarily understand why they should. At the most basic level, would you pay £500k a year in tax and stay here and take a punt on Dubai?

Or take ….

GrannyGravy13

ronib

It’s just come to my attention that high earners are relocating to Dubai which is a tax free haven with excellent international schools and outstanding medical care. Crime rates are low. Air conditioners are essential.
My observation is that for a certain group of highly taxed families the UK is a very unwelcoming proposition. I wonder when this government will come to its senses if ever ….

I know two families who have relocated to Dubai since the last election. Another is on the process of moving over there.

That's as may be, GG13, but the notion that hundreds, or thousands, of very wealthy individuals are moving out of the UK to avoid being taxed has been discredited. A few, may be but it's not an exodus.

taxjustice.net/press/millionaire-exodus-did-not-occur-study-reveals/

I actually find it quite abhorrent that those who have gained the greater proportion of the nation's money and who pay the smallest proportion of tax than anyone else on it are leaving the country because they don't want to be required to contribute their fair share.