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Tax wealth

Volume 732: debated on Tuesday 9 May 2023

The petition of residents of the United Kingdom,

Declares a fair tax system would ensure that those with the broadest shoulders pay the most; further declares that income from wealth is taxed at lower rates than regular income; further notes that simply equalising Capital Gains Tax rates with income tax rates would raise f17 billion per year that could easily fund an inflation-matching pay rise for the nurses, teachers, ambulance drivers and all public sector workers.

The petitioners therefore request that the House of Commons urge the Government to scrap this tax advantage for the wealthy and to instead tax wealth fairly therefore allowing for pay rises for public sector workers through the reallocation of funds.

And the petitioners remain, etc.—[Presented by Richard Burgon, Official Report, 14 March 2023; Vol. 729, c. 803.]


Observations from the Financial Secretary to the Treasury (Victoria Atkins):

The Government thank the hon. Member for Leeds East, Richard Burgon MP, for submitting the petition.

The UK tax system is designed to ensure among other things that the richest in our society pay their fair share on their wealth and assets, with the tax system taxing wealth across many different economic activities, including acquisition, holding, transfer and disposal of assets and income derived from assets.

The Government have recently gone further to make the tax system fairer and more efficient. As announced at autumn statement 2022, the dividend allowance has been reduced from £2,000 to £1,000 and will fall to £500 from April 2024. Similarly, the capital gains tax (CGT) annual exempt amount has been lowered from £12,300 to £6,000 and will be reduced to £3,000 next year. These reforms support strong public finances and make the system fairer and more progressive by bringing the treatment of investment income and capital gains closer into line with that of employment income, while also maintaining simplicity and removing administrative burdens by ensuring that those with low levels of dividend income and capital gains are kept out of paying tax for small amounts.

On top of this, the income tax system is already highly progressive. The top 1% are projected to pay over 28% of all income tax in 2022-23. The Government have also taken steps to ensure those with the highest incomes contribute a greater share, strengthening the public finances in a fair way. The income tax additional rate threshold has been reduced from £150,000 to £125,140, meaning the top 2% of taxpayers will pay more in tax. The vast majority of the revenue raised from decreasing the threshold, over 80%, comes from those earning over £150,000.

Pay for most frontline workforces—including nurses, teachers, armed forces and police officers—is set through an independent pay review body (PRB) process. These independent bodies consider a range of evidence when forming their recommendations. The Government accepted the pay recommendations of the independent PRBs for the NHS, teachers, police and the armed forces for 2022-23. These gave the highest uplifts in nearly 20 years, reflecting the vital contributions public sector workers make to our country and the cost of living pressures facing households. The 2023-24 awards for most frontline workforces will also be informed by recommendations from these PRBs.