New Labourites Call For New Wealth Taxes

by Robert Lee, Tax-News.com, London

27 June 2005

Two of the most influential policy advisors to Tony Blair's New Labour government have reportedly angered Chancellor of the Exchequer Gordon Brown by suggesting that new taxes should be levied on capital transfers in order to tackle growing economic and social inequality in British society caused by "brute luck" factors such as rising property prices.

In a new book written by Lord Anthony Giddens, the Blairite policy guru credited with New Labour's 'third way' philosophy, and Patrick Diamond, who was a special advisor to Labour's election campaign coordinator Alan Milburn, it has been suggested that the government should explore a broad-based capital tax extending beyond the current inheritance tax system to include all lifetime gifts.

The pair argue that such a levy is needed to help reverse a "steady rise of inequalities in the distribution of wealth".

"The accumulation of wealth is excessive and unjust where it arises not from hard work and risk-taking enterprise, but from 'brute luck' factors such as rising returns on property and land," the former advisors stated in the book - 'The New Egalitarianism' - excerpts from which were recently published in the New Statesman magazine.

The Conservative Party was quick to denounce their ideas, which Shadow Chancellor George Osbourne suggested would "create untold economic damage".

"Tony Blair and Gordon Brown need to make it clear they will have nothing to do with this dangerous nonsense," he added.

The Treasury has been quick to distance itself from the book and its tax proposals, stressing that they do not reflect the Chancellor's policy on inheritance tax and capital taxes.

"Mr Diamond is a former adviser to Peter Mandelson and Alan Milburn but he has never been nor will he ever be an adviser to the Treasury on tax matters," one source commented, according to the Financial Times.

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