Clegg's "Emergency Wealth Tax"

2010: Fair Game - Liman

The media is full of stories that Nick Clegg is about to suggest an emergency wealth tax. The proposals seem to focus on taxing wealth rather than income. He will be outlining his thoughts next month at the LibDem annual conference (not that urgent then!). It is difficult to remain even handed when politicians come out with headline grabbing statements. Mr Clegg, as we all know has somewhat lost the shine that surrounded him during the last election, though quite how fair an assessment this really is remains to be seen. I have to admit that I tend to be pretty sceptical of most politicians, but in particular the three party leaders. All of whom purport to have "family values" yet applied for jobs whilst they have young families that would certainly require longer working hours than most of us would contemplate, removing the ego from a career is not an easy task, in politics it appears particularly difficult.

Returning to the issue at hand, a fair tax system is relative to what you believe "fair" to be. One could take the view that fair, would be everyone having the same and therefore paying the same tax, or simply a fixed sum. Alternatively fair might be paying the same proportion of income as tax (rather than the multitude of different rates of tax on different forms of income). As I have said before, there is needless complexity in the UK tax system. As a financial planner I am duty bound to help reduce tax payments, which we accept is not the same as "tax dodging", because deep within us, we are probably of the view that our taxes are not spent wisely, much is wasted and we should be paying a lot less. The problem as I have said before is that there is an incentive to arrange your affairs in a manner that results in as little tax being paid as possible. This is true of the self-employed nanny to the large multinational. This is daft, but nobody (no politician) wants to address this basic problem. Instead they focus on how taxes will be spent (or not) and shifting the rates of tax by millimetres once a year.

There is no doubt in my mind that the system does not work well. The really wealthy tend to pay very small amounts of tax, whereas those earning between £100,000-£1m pay huge amounts of tax proportionally. I don't profess to have all of the answers on this, except that I do firmly believe that a single rate of tax applied to all forms of income, however they are derived, would make much more sense and would be an awful lot fairer. Wouldn't it be better to live in a country where we all felt a sense of fairness and perhaps joy in paying our taxes that contribute to the society in which we want to live.... I know, I must be dreaming.