AAT responds to possible UK wealth tax to fund coronavirus response

A new report from the University of Warwick and the London School of Economics, funded by the Economic and Social Research Council, suggests that a 1% "wealth tax" per year for five years on net assets above £500,000 would raise more than £260 billion for the UK’s response to the coronavirus (Covid-19) pandemic. 

Responding to the report, Adam Harper, Director of Professional Standards and Policy at AAT, said: "We know that there will inevitably be a need to repay the cost of the many programmes introduced in response to the ongoing Covid-19 pandemic in order to help the UK’s economic recovery. However, the introduction of a wealth tax does not appear to be either politically or economically sensible, particularly at such an unstable time, and we would urge the government to explore other options. 

"Despite a recent YouGov poll suggesting 61% of UK adults would support the introduction of a wealth tax, 75% of those surveyed believed it would be fairer to tax income than wealth. Those findings were also based on excluding pensions and the main home, which would inevitably create distortions, with increased wealth invested in homes and pensions. Additionally, wealth is currently taxed through several means including income tax, capital gains tax and inheritance tax, so a further wealth tax may well be unnecessary. 

"If there is a strong desire to ensure the wealthiest in society contribute more to the costs incurred due to the pandemic, the government should look at introducing a legally binding executive pay ratio. This was supported by 90% of AAT members (PDF) and 57% of the public at a maximum ratio of 20:1 and would echo frontrunner UK and international organisations including AAT, as well as going further than the existing legal requirements on publishing executive pay. 

"Therefore, ahead of imposing a wealth tax, the Chancellor, HMRC and the UK government should look at the effectiveness of existing taxes and consider improving them. Otherwise, they could be risking a potentially damaging policy that may well backfire despite initially seeming popular with the public."

For more information see AAT’s response to the Treasury Select Committee inquiry into Tax After Coronavirus (PDF).