“Now they want to tax jewellery: New Lib Dem wealth plan to target ALL assets” screamed a headline in the Mail on Sunday yesterday, warning their readers of the latest appalling imposition that Lib Dems in government were about to put upon the public.
“Families will be forced to pay tax on jewellery and other heirlooms under controversial new plans drawn up by the Liberal Democrats. Under the scheme, tax inspectors would get unprecedented new powers to go into homes and value rings, necklaces, paintings, furniture and other family treasures.” they said. If you really want to, read the full article here.
Is this really true? Have Lib Dems really singled out jewellery to be the latest to bear the brunt of the recession?
Well, here is what the consultation paper that they took this from actually said, which was produced by the party’s tax policy working group of which I’m chair. I’ll let you judge for yourself, pausing only just to remind you that this is a consultation paper, deliberately intended to gain input and views from people in the party (and those beyond welcome too).
There has been some suggestion of using a net wealth tax to target the wealthy. For instance, the French operate such a system. Our mansion tax proposals target a similar (though not identical) group as property is a significant component of UK wealth. However net wealth tax covers a wider set of assets. It would require taxpayers to self-assess their net worth (which may be very difficult for illiquid assets) and would generally be quite complex to administer. And HMRC, in policing the system, may have to visit homes to test whether asset values of jewellery, paintings etc were correct.
Q20. Would you support a French style net asset tax?
It really is a shame that this seems to have got the headlines, as the consultation paper includes a whole load of ideas which we think will find quite a lot of favour with both Lib Dem members and the wider public. Of course you might disagree – but if so then we’d really like to hear from you: this is indeed rather the point of publishing a consultation paper! In fact, uniquely for Lib Dem working groups, this is the second consultation paper we’ve issued for exactly this reason. We’ve also hosted a webinar with Danny Alexander, supported local parties to hold ‘pizza and politics’ type discussions on our future tax policy, and will be holding sessions at most regional party conferences over the next few months.
So please tell us what you think. If you fancy a rather more sensible outside view of what’s in the paper, the Guardian have a really balanced (if not wholly positive) piece about it here.
For myself, I think we are developing proposals which will:
Help the lowest-paid: we are proposing that once we have achieved our aim of increasing the income tax threshold to £10,000, it should continue to rise, to the level of full-time work on the minimum wage (currently around £12,100)
Be simpler: by making the process for most people completing personal tax returns very much simpler; exploring allowing small companies to pay tax based on their own accounts, rather than have to prepare a separate tax return, by expensive experts
Help small and new businesses to get going: through possibly rewarding small companies for the burden which administering aspects of the tax system places particularly on them; extending exemptions from paying employer National Insurance contributions for very small companies; building on the good work already done under the Coalition Government in continuing to make complying with HMRC requirements administratively simpler; and possibly helping new small businesses struggling with short-term cashflow issues
Ensure the richest pay a fairer share: through introducing a ‘mansion tax'; possibly preventing some people effectively doubling their tax-free allowance, by merging the allowances for income tax and capital gains tax; looking again at situations such as ‘non-dom status': and continuing to look at the tax relief for pensions for the wealthiest
Ensure big businesses pay their fair share of tax: by strengthening further the General Anti-Abuse Rule which comes into effect this year with a more radical General Anti-Avoidance Rule which will institute a low cost system for companies proposing innovative ways to avoid tax to gain or not gain pre-clearance from the tax authorities, as already happens in other countries. This would also have the benefit of reducing the cost of administration for other companies by allowing the repeal of a large volume of highly specific anti-avoidance regulation
Prevent problems which contributed to the 2008 financial crisis recurring again: by reducing the incentive to fund business growth through excessive debt by changing the generous tax treatment of interest payments; and restricting the ability of businesses to offset losses in previous years against profits in the current year to reduce their tax bill
Be much greener: where we still have considerable further work to do as a group, and will be working in close conjunction with the party’s ‘Towards a Zero Carbon Britain’ working group
If you’d like to see more detail, the full paper is here.
But all these ideas are just up for consultation at the moment. Please do let us know what you think: please do send your views and comments to Kevin Norton at HQ on [email protected]
* Jeremy Hargreaves is Chair of the tax policy working group, and was previously Vice Chair of the Federal Policy Committee.