The Chancellor is said to have considered a huge fiscal raid in this autumn’s Budget to plug the gaping hole in public finances after record spending on coronavirus. The policies were reportedly poised to target middle classes and wealthier people with increased taxes. But Mr Sunak appeared to rubbish those claims when he was pictured earlier this month with notes claiming there would be no tax “horror”. Increasing inheritance tax may not have raised the funds needed anyway, if the analysis of Tax Research UK is anything to go by.
Founder of the organisation, Richard Murphy, has proposed reforms to inheritance tax which he believes would be a more effective wealth tax.
He said on the Tax Research UK website: “Because it collects relatively little money there are a great many options for replacing inheritance tax.
“The most effective, and fairest, would be to tax all receipts of gifts during a person’s lifetime.
“This would discourage the concentration of wealth and instead of charging the dying – who could then give to whomsoever they wanted – would charge the living to reduce inequality. Few doubt that this is the best long term direction of travel.”
He also suggested that there could be bands of tax due because a single rate “makes little sense”.
Mr Murphy added in his 2019 article: “Houses could be exempted but be subject to capital gains tax on death instead.
“This would require that tax only be due on the death of a second owner in the case of jointly owned property, and that gains during the whole of life and not just in the final property be taken into account, but this should present very few problems in the vast majority of cases.
“This means only the gains arising on houses would be taxed, removing a major grievance.”
As the Government also refuses to commit to an extension of the furlough scheme, Mr Murphy warned the move could be the “death knell” for the Conservative Party.
He added: “The day the unemployed realise their children are impacted by this, the Government will fear that those people start protesting.
“They’ll say ‘you could have kept us in work and our homes, but you didn’t because you prioritised the national debt.’
“Those people could then vote Labour, at every level this threatens the Conservative Government’s survival.
“If they don’t extend the furlough scheme it will be catastrophic, both politically for the Conservatives and economically for the country.
“If he goes back, and he is signalling this, to ‘sound finance’ – by which he means prioritising the debt, he will write the death knell of this Conservative govern