We have all heard about it. In fact, since 2008, there have been at least 1.13 million stories about the UK government cutting its spending. We also know why the UK government has to cut its budget. We have a public debt that stands at around £988.7 billion (as of February 2012); this is around 63.1% of our GDP. Of course, if the government doesn’t cut, then we would need to borrow more, and thus there would be greater spending on the debt repayments. And if we look like we are struggling to repay our debts then our borrowing rate (bond yields) will be no longer the nice 2% (as it is at the moment) but would rise to a dangerous level of over 7% – just like Greece (20%) Spain (6%) and Portugal (11%) etc. Therefore, the only way to reduce our national debt is to cut spending and boost government revenue (via taxes such as the VAT). However there is another way…
It is called the wealth tax (used in countries such as Norway, Switzerland and the Netherlands) – taxing peoples purchasing power stock (rather than income flow – such as income tax). These are things such as property, pensions, antiques and jewellery. I am not talking about people who have a ‘net worth’ of £500,000, or £1,000,000. I am talking about the ‘super rich’. These are the people that will be in the Sunday Times Rich List later this month. These are the households with an average wealth of £4 million.
So what are the figures? Well the total personal wealth in the UK stands at around £9,000bn (compare that with our national debt and it’s a pitiful £990 billion). Anyway, if you don’t feel you own that much wealth than that’s because you probably don’t. This is because the richest 10% own a very large amount (around £4,000bn). This averages at around £4 million per household. Therefore if we have a ‘one-off’ tax of 20% for the richest 10% (the 6 million households with an average net worth of £4 million) than the UK government would receive around £800 billion.
This would pay off the national debt and avoid the need for deep and harmful cuts in education, welfare and public services. It is a serious alternative to what is being proposed and carried out by the Coalition government. This amount of money would also boost our economy, as it will create/save jobs.
Of course there are arguments against it, such as it will be difficult to collect. But surely this will be easier than collecting income tax as it’s harder for someone to hide a million pound house than minimising their declared income through the country’s best accountants. But won’t they simply pack up and move out of the country? It is very unlikely that the top 6 million people will simply just pack up and live in somewhere like Poland. If people have this amount of assets and want to live here and be British, then they will have to pay their bit. The general public will have little time for simply unacceptable attempts at avoidance.
This isn’t my idea. All these calculations and ideas have been done by a group of academics at the Glasgow Media Group. They researched how many people agreed with this and a staggering 74% of the population agreed with this tax.
At present, the UK has been having sluggish growth. These are mainly due to policies that and affect the poorest people in our society. Why should the poorest people in our society pay for the mistakes that reduce growth (although our export markets haven’t been doing much better), increase unemployment the wealthiest have committed? No matter what has been said, these cuts are unfair.
The British people are not passive and it isn’t true that they will simply accept policies that they see as completely unfair. We only have to look back and remember what happened with the poll tax.
Although this tax may sound good, we probably know that it is very unrealistic thing to happen – either from Conservative or Labour. It is just too radical. But what is interesting is that the only thing we ever hear about is cuts cuts cuts. There is an alternative out there. The media’s narrow approach, that the only option is government cuts, seems to support the Propaganda Model by Herman and Chomsky. But maybe that’s for another day…