Taxing the wealthy becomes popular in the UK

Prime Minister Boris Johnson in London on June 3.

Funny things are happening in Margaret Thatcher’s country: tax is once again becoming a popular idea. Charging the wealthy, in particular, is back. The major economic shock of the Covid-19 pandemic will cause an abysmal deficit this year, but after a decade of austerity, there is no longer any question of starting the budget cuts again. Boris Johnson, the Prime Minister, has repeatedly excluded him. Gradually, an increase in taxation even seems to be necessary, including a possible wealth tax.

At the moment, neither the ruling Conservative Party nor the Labor opposition support such an idea. But the subject is gaining ground. According to a survey, in early May, 61% of Britons support a wealth tax of more than 750,000 pounds sterling (850,000 euros), while only 14% oppose it.

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Richard Murphy, economist at Tax Justice Network, an association fighting against tax evasion, published, on April 22, a report assessing British taxation between 2011 and 2018. His conclusion: the taxation on earned income was 29.4%, while that on capital income was 3.4%. Theoretically, putting the two taxes at the same level, it could bring in 174 billion pounds (195 billion euros), he calculates. Murphy hastens to add that he is not necessarily asking for such a large adjustment, but believes there is “A large margin of maneuver to tax wealth in the United Kingdom”.

Mentalities evolution

With conservative Boris Johnson in power, is it possible to introduce such a tax? Perhaps not as is, but his government leaked a test balloon in February to create a surtax on high-value real estate. The idea was finally abandoned, but says a lot about the evolution of mentalities. According to a poll by the PoliticsHome site, in May, 72% of MPs think that “Taxes will go up to finance public services”, and 83% agree that “The role of the state in the economy will increase”. It seems a long time ago when, under triumphant blairism, Peter Mandelson, then Labor Minister, said: “We are quite comfortable that people get rich like pigs.

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If the pandemic accelerated the movement towards higher taxation, it had started in the aftermath of the financial crisis of 2008. Since then, the tax benefits of the rich have been gradually reduced. This is particularly true for foreigners, whose famous status of “non-domiciled”, which allowed them to be taxed only on a fraction of their wealth, has been limited. The number of beneficiaries has almost halved since 2008, reaching 80,000 people today.

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