You will tax this. Well, you will tax this. But he has a hidden tax bomb in his hands. You already paid taxes on everything and on top of that you’re smelly liars.
St. Nigel’s resurrection aside, I think that’s the takeaway for about 99.5 per cent of us from this week’s general election campaign.
It was, to put it mildly, a bit boring. But for all the made-up noise about tax this week, Jeremy Hunt actually appears to have hit the mark, although he doesn’t quite know how yet. The arrow came yesterday, in a typical campaign bet, as the Chancellor challenged his likely successor to rule out increasing any existing taxes on property.
Obviously, Rachel Reeves didn’t do this. And that’s because some Labor big minds familiar with his thinking say that’s exactly what he’s most likely to do in his first Budget.
I hear he is looking very closely at a range of tax increases on wealth, and the creation of new council tax bands for more expensive homes is also at the top of his list.
First, the reason. Sir Keir Starmer and Reeves face a truly dire economic legacy. To pay for his own tax cuts (and to set a dastardly trap for Labor) Hunt is leaving them with a huge hole in the public finances of around £20bn a year.
Current spending plans mean only a one percent increase in real terms for all departments. Inflation, larger increases in health and defense and rising debt interest costs are leading to cuts to most ministry budgets of up to 3.5 percent per year, according to the Institute for Fiscal Studies. Huge cuts were made to the police, courts, railways and the arts.
Reeves has already vowed not to take on more debt for daily expenses. It is certain that he will not want to introduce a new wave of George Osborne-style austerity as his first step into power. This leaves taxes as the only way to fill the fiscal black hole.
Reeves does not want to raise more jobs than the Conservative Party has, and Labor has already refused to increase the three big personal taxes (income tax, national insurance contributions and VAT).
There is only one big area to look for: wealth. And boy, is there a lot attached to British property at the moment. Our total housing stock is now worth £7 trillion
There’s only one big area left: Wealth. And boy, is there a lot attached to British property at the moment. Our total housing stock is now worth £7 trillion.
The revision of council tax bands is long overdue. In England, governments haven’t dared to touch them since 1991, so the top tier, Group H, still applies to homes worth more than £320,000. This means modest homes in some cities pay the same as multimillion-pound piles. Creating one or two more groups could raise billions of dollars.
“Most people’s house prices are already online so it’s not technically difficult to do a revaluation,” says one knowledgeable Labor figure. “The difficult thing is the politics of it all. It won’t be popular, but it makes sense, and if we do it now, we’ll get out of this. “In five years, everyone will forget about this.”
Reeves also appears likely to raise capital gains tax to extract more profits from company owners who pay themselves dividends. It could also close some inheritance tax loopholes, such as farmland, and some that benefit wealthy self-employed people – such as, unsurprisingly, the loophole that allows well-heeled law firm partners to pay zero national insurance contributions.
Then labor makes the rich wet again; You might think it’s an old game from the seventies.
What’s interesting is that if Reeves also uses some of this new money to reduce the tax on workers’ earnings — which is very likely — a raid on the fortune might not be a bad idea after all. In other words, we shift tax from income to wealth.
Not only is this course advocated by most economists, but some centrist Tories have long argued in this direction – such as Lord Willetts, who now runs the Resolution Foundation think tank.
They argue that much of the UK’s current wealth is unearned. This is due to the rise in house prices during our 50-year real estate boom. The cost of the average home in 2021 is 65 times higher than in 1970, while earnings have increased only 35 times.
It’s only fair in everyone’s calculations to cream a pretty significant pile of wealth while allowing everyone to take home more than they earn. This will also further encourage work and may even make it easier to get on the housing ladder.
There is only one thing; Don’t expect to read this when Labour’s manifesto is published next week. As good policy as this is, it’s too honest a thing to accept during a terrible general election campaign.
That’s why the mandarins in the Foreign Office may not be saddened by the departure of some Conservatives…
There is relief in the farthest reaches of the Foreign Office with the imminent departure of the Tory government.
Several of its former members have caused intense diplomatic headaches over the past 14 years.
Ambassadors will not miss the minister, who always had to be met on the plane in a wheelchair because he was so drunk during the flight.
Nor are there any tears shed for the Tory MP trade ambassador who had to be smuggled out of a brothel in a less salubrious part of town – and apparently more than once.
But the prize for least missed will surely go to the former Tory special adviser who disgraced himself in spectacular fashion on a trip to Washington DC.
After a late night on the tiles, he breached the security walls of the ambassador’s magnificent Lutyens residence and ended up sickening on the drawing room floor.
What was particularly surprising was the ambassador’s fear that his next-door neighbor on Observatory Hill might find out: the Vice President of the United States (for a time, Joe Biden).
The diplomatic service is being cautious about names. At least for now.
As equally stressed puppies on tour, will their Labor successors be better behaved?
Britain’s return to Brussels
Hundreds of millions of Europeans are voting to elect a new European Parliament. The big story will be the expected victory of the far right. Less noticed is the fact that a Briton could regain his seat in the Brussels parliament.
Sir Graham Watson was a Liberal Democrat MP for 20 years but is now running in Italy – on behalf of the United States of Europe Party – thanks to his dual citizenship.
Tom Newton Dunn is a political journalist and author