Stop the stampede to cut inheritance tax
John Clark writes…
First published: October 2007 – Gazette & Herald
Taxation is wonderful. It enables people to live together in a civilised way. I don’t understand why we want a society with low taxation. Taxation gives us; education; police; the bins emptied; street lights; defence; youth clubs; cheap food; the NHS; care for the elderly; roads; housing; fire services and so on. Why would we want to reduce these vital strands of society?
The super rich would no doubt be able to cope without any of the above. However for the vast majority of British people we have used, use or will use all of these services. On that basis there is no question other than which taxes do we raise to pay for them?
One group of people that ‘dodge’ paying taxes are the non-UK domiciled tax payers. The so called ‘non-doms’. Labour promised to tax this group who benefit from British Society but contribute very little. As usual nothing happened. I was delighted when George Osborne (the Tory Shadow Chancellor with wealthy parents) said he was going to tax the non-doms. Then the problems start. It is a flat tax of £25,000 for the oil billionaire, the Polish plumber or the Malawi nurse. A poll tax for non-doms.
This money is to go to the very rich. At present the richest 6% in the UK pay Inheritance tax. Under the Tory proposals only the top 1% will pay Inheritance Tax. So if Mr. and Mrs. Opportunity have a house worth £2million the first one to die leaves £1million to Greedy – no tax to pay. When the second parent dies they leave £1million to Greedy – £2million Tax Free.
The problem with Inheritance Tax seems to be its image and its bad press.
Myth number one: Many home owners believe they will pay Inheritance Tax. Wrong. By the time the second one dies the value of their ‘estate’ will have fallen.
Myth number two; ‘Our children will need our support’. The reverse is true. Most children support their elderly parents. These ‘children’ are usually in their forties and fifties.
Myth number three: The money has already been taxed. Wrong. By far the biggest part of most estates is the value of the house. The majority of this asset has come from the increase in house prices, not the original house price.
So putting all this into the pot I don’t understand the political stampede to reduce Inheritance Tax. Where are we going to reduce the spending? Pensions? Education? Care for the Elderly? Please, not in Ryedale.
The other solution to pay for the cut in Inheritance tax is central government decreases its money to local government and up goes the Council Tax.
Inheritance Tax is good in terms of equality, good in terms of redistribution of wealth, good in terms of fairness. The Tory belief in people standing on their own two feet and given an opportunity must not be put in the same bracket as greed and selfishness. A £280,000 handout to all dead millionaires is no benefit to 99% of the population. To make it worse the population has a reduction in services for each £280,000 to the millionaire’s estate. If 99 out of a hundred people lose out why is the Tory proposed change in Inheritance Tax so good?