A wealth tax could create an emergency fund to get people through this crisis

Richard Burgon
© David Woolfall/CC BY 3.0

The scale of the assault on living standards is truly terrifying. People are facing the biggest single-year fall in incomes in 70 years. Yet this week’s Tory Queen’s Speech highlighted the vast gulf that exists between plummeting living standards and the measures coming from this government to address this. Sitting through Boris Johnson’s speech in parliament, it all had a business-as-usual feel to it, with lofty talk about resolving the cost-of-living crisis through higher growth at some unspecified time in the future. That is nowhere near good enough.

Our communities are in a cost-of-living emergency right now. What else can we call it when millions of people are having to choose between heating or eating? When pensioners are riding buses to keep warm and when parents are going a whole day without eating to keep their kids fed? In any emergency, you need an emergency response. The number one priority now for the government should be to urgently get more financial support into the pockets of the millions of people being hit hard. Instead, the Tory government is sitting on its hands and refusing to act. Not because they are incompetent or because they are out of ideas but because those the Tories exist to serve are doing very well during this crisis.

We hear a lot about the cost-of-living crisis, but some are doing very well at the moment. British billionaires increased their wealth by £290 million per day in the first year of the pandemic. Tory donors have been handed billions in crony contracts. Bankers are getting a multi-billion tax cut – even as banks are making record profits and City firms are paying out huge bonuses. Our broken energy system is a case in point. Bills are skyrocketing by an average of £700 per year. The End Fuel Poverty Coalition warns that the energy crisis could leave over eight million households unable to heat their homes. Meanwhile, gas and oil giants are making £900 profit every second.

But Boris Johnson is willing to accept millions of people being forced into fuel poverty because, for him, that’s more acceptable than a windfall tax, proper price caps or public ownership of energy that would tackle the profiteering of energy giants. Instead of doing next-to-nothing to tackle this emergency, the government should be doing everything it can to immediately get money into the pockets of the millions of people hit hard by this cost-of-living crisis. That’s why I have put down an amendment to the Tory Queen’s Speech calling on the government to deliver a wealth tax bill.

The amendment calls on the government to establish a wealth tax commission to examine the best ways of raising taxes from the very wealthiest and to bring forward a Bill that fulfils this aim. There are many ways that wealth taxes can raise the vast funds needed to support people through this crisis. I recently presented a petition in parliament signed by 60,000 people for an annual tax of 1.5% on wealth over £5m. That would raise £14bn a year – more than the recent increase to National Insurance would raise.

Another option would be to end the scandal where wealth is taxed at a lower rate than going out to work. Simply ending the lower rates paid on capital gains tax – paid on profits when selling assets like a second home – and on income from share dividends and removing the exemptions on these taxes would raise around £24bn per year. This could guarantee nobody is unable to pay their energy bills and could fund a permanent uplift in Universal Credit. A 10% tax on all wealth above £100m would, according to the Sunday Time’s calculator, raise £69bn. With that, we could create a social emergency fund to ensure everyone is supported through this cost-of-living crisis.

This latest assault on living standards couldn’t come at a worse time. It follows a decade of austerity and the slashing of public services and the tightest squeeze on wages in 200 years – with wages still below where they were at the time of the 2008 financial crisis. Our movement needs to offer bold solutions that address the scale of assault our communities face. A wealth tax could play a central role in building the alternative that millions of people are crying out for.

Everything Labour.
Every weekday morning.

By clicking ‘subscribe’ you confirm you have read and agree to our privacy policy

More from LabourList

Donate to fund our journalism

or

Subscribe to our Daily Email