Cable Threatens Wealth Tax In UK Taxpayer Onslaught

by Jason Gorringe, Tax-News.com, London

28 September 2010

Liberal Democrat Deputy Leader, and Business Secretary, Vince Cable has delivered an assault on affluent Britons. In a crowd-pleasing address to the Liberal Democrat conference on September 22, Cable urged that not only should UK’s highest earners continue to pay the tax of 50% on income but that the UK should now introduce new taxes on their wealth, something that would presumably exacerbate the tax exodus of highly-skilled individuals and entrepreneurs from the UK.

Having been successful in staving off the Conservative party’s intention to revoke the top tax rate, Cable said that the party would continue to push forward its agenda within the hung parliament, to “ensure fairness” in the UK tax system.

He zealously said:

“I have come to account to you, Conference, for the work I have been carrying out in the Coalition government.”

“I have managed to infuriate the bank bosses; acquire a fatwa from the revolutionary guards of the trades union movement; frighten the Daily Telegraph with a progressive graduate payment; and upset very rich people who are trying to dodge British taxes. I must be doing something right!”

Adding, on tax policy: “The biggest test of our party’s contribution to the coalition is whether we can ensure fairness more widely. You’ll remember our Conservative colleagues campaigned in the General Election to lift the inheritance tax burden on double millionaires. But they have dropped that commitment. They have gone halfway to accepting our case for equalising income tax and capital gains tax rates. They have accepted in the Coalition Agreement that the priority for cutting income tax is for low earners not top earners.”

“Ironically, we may be able to make more progress on a fairness agenda with the Conservatives than New Labour was willing to do. Labour was constantly on its knees trying to prove that it was a friend of the super rich.”

“It will be said that, in a world of internationally mobile capital and people, it is counterproductive to tax personal income and corporate profit to uncompetitive levels. That is right. But a progressive alternative is to shift the tax base to property and land which cannot run away and represent, in Britain, an extreme concentration of wealth.”

Concluding, Cable stated:

“I personally regret that mansion tax did not make it into the Coalition Agreement but in a coalition we have to compromise. But we can and should maintain our distinctive and progressive tax policies for the future.”

Back in January 2010, ahead of the introduction of the 50p rate, a survey undertaken by the Confederation of British Industry concluded that individuals would move abroad to achieve more favourable tax conditions, creating a ‘brain drain effect’ - the UK losing highly-skilled workers - and entrepreneurs shifting their investments, and thus jobs, abroad.

Cable's shock-and-awe assault will not be welcome in the City. Dave Way, Managing Director of accountancy recruiter Marks Sattin, denounced the business secretary's stated campaign as “an ill-considered attack on capitalism and the service industry – the two things", he said, "that will help this country get out of this economic mess.”

He suggested that, "[Cable is] attacking capitalism and the financial services sector because he needs to put up a smoke-screen to hide the 11% year-on-year rise in government spending – and to reach out to the public as support for the coalition bleeds away.”

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