Wealth tax increasingly likely claims former cabinet secretary - Mortgage Strategy


A tax on wealth in the UK could now be more likely than we previously thought, according to former civil service head Gus O’Donnell.

The coronavirus has altered the political landscape, O’Donnell told an Institute for Fiscal Studies event yesterday, revealing and enhancing a number of inequalities.

This has forged “a clear burning platform” for reforming the tax system, O’Donnell – who served as cabinet secretary under three prime ministers – told the meeting, the Financial Times reports.

Taxing property, pensions, securities or works of art has often been seen as a clear vote loser, and therefore politically impossible.

However, O’Donnell pointed to a number of new factors in its favour. These include a strong majority in the Commons, a popular head of the Treasury, depleted government coffers and an opposition party that has been viewed as less confrontational.

“We know that Covid has a very unequal impact. The economic impact is particularly hard on the young, women and those on lower incomes – that is going to create a feeling of ‘it’s not fair’,” O’Donnell said.

“Quite often wealth taxes have been attacked because people say they are too leftie [and] what communists and socialists do. If the debate is put in terms of ‘we want to increase spending on the NHS, but we don’t have any money’, then tax increases become more acceptable.”

However, he noted that wealthy individuals would still baulk at the introduction of a tax and the government should expect vociferous lobbying if they planned such a move.

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