This election is the first for years that there is agreement about the need for more public spending.
Part of this will come from very sensible borrowing for investment, but tax will also play a key role. Here there is likely to be a gulf between the main parties over their approach.
One place to start would be by targeting the extortionately low levels of tax the wealthy are paying on their assets. HMRC figures show that 9,000 of the richest people in the UK paid just £5.1 billion in tax on £33.7 billion capital gains income in the latest financial year. That’s an average tax rate of 14.8%, compared to the basic income tax rate of 20%, and a higher rate of 40%.
This low tax lifestyle open to the richest is made possible when income is turned into capital gains and taxed at rates lower than ordinary people pay on their income from work. It means that a hedge fund manager can pay a lower tax rate than their cleaner.
Polling we carried out with Oxfam and YouGov shows that a sizeable majority of people think income from wealth should be taxed at least as much as income from work. The Institute for Public Policy Research estimate that this chance, once implemented, would raise £25 billion a year.
In this general election we want to make sure that this, along with a host of other issues, is on the agenda.
Working in coalition with others we have published a manifesto that sets out 33 policies for tax equality. We’re calling on politicians to tax wealth more, curb tax avoidance and improve the administration of the tax system. We want to restore people’s sense of having a stake in the UK.
There is broad support for these proposals from across the network of academics, think tanks and campaigners that we work with. The manifesto sets out costed policies that could raise £69 billion. It also includes measures where detailed costings are unavailable which could raise significantly more.
Here’s what we are calling for:
Dealing with tax inequality
- Tax different types of income in the same way and scrap the current system of capital gains reliefs: £25bn a year after an initial phase-in period.
- Scrap the tax-free dividend allowance, rolling it into the personal allowance - £1.3bn.
- Place a limit on the amounts which can be held in an ISA.
- Have a single rate of pension tax relief at 28% - £neutral.
- Limit the tax-free pension lump sum amount - £2bn a year.
- Replace council tax with a proportional property tax, and once this has been implemented scrap Stamp Duty - £4.2bn a year.
- Replace business rates with a land value tax on commercial property - £ neutral.
- Turn inheritance tax into a progressive tax on lifetime gifts and limit inheritance tax reliefs - £4.8bn a year.
- Raise the corporation tax rate to a minimum of 24% - £12bn a year.
- Expand the financial transaction to tax to include financial derivatives and other areas of the finance trade - £6.8bn.
Curb tax avoidance and evasion
- Tax the offshore structures used by global tech giants - £8bn a year.
- End tax breaks for private equity firms that bury companies in debt.
- Strengthen UK controlled foreign company rules - £1bn a year.
- Support proposals for a global minimum tax rate.
- Move towards a unitary system of taxing multinational corporations - £6bn a year.
- Make online platforms responsible for collecting VAT - £1bn a year.
- Limit the benefits of the non-dom rule.
- Make British sports stars pay British taxes.
- Investigate the possibility of introducing a US-style citizenship-based tax system.
- Improve disclosure of profits and taxes of smaller UK companies.
- Compel larger companies to publish reports on a country-by-country basis.
- Introduce improved public registers of beneficial ownership, including the beneficial ownership of trusts.
- Ensure that the UK Overseas Territories and Crown Dependencies publish registers of beneficial ownership of companies and trusts.
Make tax accountable
- Dramatically scale up the number of targeted audits that HMRC carries out.
- Properly resource HMRC and Companies House.
- Consider having a tax office offering free tax advice for every town with a population over 100,000.
- Review tax reliefs and ensure ongoing parliamentary accountability of their operation.
- Greater transparency of HMRC tax avoidance settlements.
- Carry out full equality impact assessments for all tax policy changes to ensure they are progressive and fair.
- Commission a comprehensive tax spillover assessment of the UK tax system.
- Regular publication of appropriate information about the tax system, including a better estimate of the tax gap.
- Ensure that whistleblowers are properly rewarded and protected.
- Ensure that tax advisors and accountants are regulated.