A one-off wealth tax on individuals could raise as much as £260bn ($346bn) for UK coffers.
That’s according to the final report of the Wealth Tax Commission (WTC), published on Wednesday.
Under one scenario, the tax would be levied at those who own more than £500,000, charged at 1% a year for five years, and would require a couple to have net wealth of more than £1m before any wealth tax would be payable.
That would raise £260bn over five years, after administration costs.
The WTC has made calls for the government to consider the proposal if it chooses to raise taxes as part of its response to the COVID-19 crisis. It says that “it should implement a one-off wealth tax in preference to increasing taxes on work or spending.”
The report also found the same tax, at a threshold of £2m (or £4m between a couple), would raise £80bn for the public purse.
The WTC stipulates that the defining feature of a one-off wealth tax is that it would be a one-off exceptional response to a particular crisis.
It says: “Individuals would only be taxed once based on the wealth they owned valued at a particular date. They would still be allowed to pay the tax in instalments over a number of subsequent years, to reduce the cost in any single year, but the amount of tax would be based on their wealth on the initial assessment date.”
Arun Advani, assistant professor at the University of Warwick said: “We’re often told that the only way to raise serious tax revenue is from income tax, national insurance contributions, or VAT. This simply isn’t the case, so it is a political choice where to get the money from, if and when there are tax rises.”
WATCH: Why UK tax rises may seem inevitable
The report lays out alternative tax rises which could also raise £250bn over five years. These include raising the basic rate of income tax by 9p (20p to 29p); income tax rates to rise by more than 6p; all VAT rates to rise by 6p (taking main rate from 20p to 26p); or for corporation tax to rise by 5p and VAT to rise by 4p.
It concludes a wealth tax would be a fair and efficient way of reducing inequality.
The research was carried out by a team of over fifty international experts on tax policy and practice. The three commissioners are academics from the London School of Economics and Political Science (LSE) and the University of Warwick, and a leading barrister with long experience of advising high net worth individuals.
Alongside the report, the Wealth Tax Commission has launched an interactive website that allows members of the public to model their own revenue-raising options, and see how much they would pay under different options.
Emma Chamberlain, barrister at Pump Court Tax Chambers said: “People sometimes say the super-rich won’t pay. My experience is they are happy to pay, as long as the tax is simple to operate, affordable and they don’t feel they aren’t being singled out with penal rates.”
“The trouble is that our current way of taxing the wealthy is far too complicated leading to avoidance and resentment. We need a better way forward,” she continued.
Commenting on the report, Rebecca Gowland, Oxfam head of inequality campaign, said: “At a time when so many people are facing hardship as a result of the pandemic, this feasible and deliverable one-off wealth tax could transform lives – an uncomfortable truth for vested interests that are likely to resist it.
“The difference this revenue could make for the most vulnerable in society is staggering. Just a quarter of the extra money raised would be enough to keep and extend the social security weekly uplift and allow us to meet our lifesaving aid promise to the world's poorest people.
WATCH: Should I pay off debt or save money during the coronavirus pandemic?