Neglected Assets: A case for a radical rebalancing and reform of our Tax System

In a twist worthy of a Shakespearean comedy, The Financial Times—yes, the very bastion of capitalism—has thrown its weight behind the call to increase taxes on the wealthy. It’s as if Ebenezer Scrooge himself woke up, not just offering Bob Cratchit Christmas off, but also turned his business into a consumer mutual. 

This surprising endorsement underscores a deeper, more troubling reality: the Tories have, over time, alienated their once staunchest supporters — pragmatic economic thinkers and investors. The people who’d toast their morning coffee to the Conservatives, secure in the knowledge that their financial acumen was reflected in sound government policy. 

However, even the FT don’t try to hoodwink their audience against their own interests; understanding the reality of how years of economic stagnation has impacted our country and the wealth imbalance. 

The Tories have managed to estrange themselves so far from these stakeholders, pushing them away with a series of economic imbalances that act more like tragicomedies than strategy. Gone are the days when Tories  were seen as reliable economic stewards. 

The Tories seem intent on peddling narrow, faux-capitalistic dogma than fostering real, sustainable growth. The FT would appear to not be as easily fooled. They understand that the economy needs careful tending, like a well-pruned garden, not the reckless abandonment of letting a child  loose with garden shears. 

The article claims that parties need to the bolder on the economy. Now you might think, bold from FT writers, we’ve all been here before; savage tax cuts, privatising the police force, parading with “We Love Liz” t-shirts and having a national “Margaret Thatcher day”. Except no. Instead, amongst many other arguments, the article states that arguments by the right that better economic rebalancing and higher taxes will impact the economy is just nonsense. They say that due to the state of public finances and a public interest to see robust investment into public services that we need to be honest about increasing taxes if we are going to prevent going through a cliff-edge. They have even argued that due to lack of private investment that it would be in our interest if a major re-balancing of wealth in this country through a series of targeted tax rises on the wealthy be implemented as the government can efficiency invest into the economy. The extreme position the Tories have left us in means we have no major infrastructure going on in the UK – the need is obvious. 

While it stop short of calls for any kind of Wealth Tax or increasing top earners’ tax rates it, the author argues that we should be looking at reforming our overly complex tax system which courts the favour of people with big pockets and good accountants. Amongst its arguments was  using revenue to bring VAT down and combining NI and Income Tax together. 

I have always been a strong advocate of reforming our tax systems.  The current tax system is deeply unfair where wealthy individuals who make their earnings by selling assets pay less tax than someone who is on a paid salary but earning considerably less. 

One immediate, small but considerable change we could do to start reforming the tax system is to no longer have separate tax systems based on how people make their income (i.e. Capital Gains).  We should abolish the Capital Gains Tax and incorporate them into the current Income Tax system.  I never quite understand why people who don’t make their income through traditional salaried means should benefit from a smaller tax rate via capital gains.  

This has become a position that we in the Liberal Democrats have strongly adopted as part of our Fair Deal programme for the country. We call for: “abolishing the separate Capital Gains tax-free allowance, to tax income from wealth more similarly to income from work”. This is a position that makes me proud to be a Liberal Democrat. If only the FT took notice. I hope this continues to form part of our manifesto and we continue to champion this.  It’s important the imbalance of our wealth is seriously shifted in a new great transition.

Some might ask if, as the Party of Gladstone  our purpose is to liberate ourselves from the constraints of Government, including taxes. But as I always found myself challenging, we are the Liberal Democrats not the Libertarian Democrats. Our foundation lies in the principles of liberalism, which emphasise fairness, social justice, and the importance of community alongside individual freedoms. True liberalism understands that economic liberty must be balanced with social responsibility and I hope we don’t depart from that.




* Andrew Chandler is a former Labour member turned Liberal Democrat Member in Stoke-on-Trent

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  • Steve Trevethan 5th Jun '24 - 1:18pm

    Thank you for a most relevant article!

    L. D. assertive promotion, and possible action, on reforming our pro-big wealth, pro-creditor and pro-deceitful obscurity tax set up would be better for the vast majority of our citizens and their children in itself, and for the desperately needed repair, maintenance and development of our infrastructures which, in turn, would make our society more efficient, generally better off and parts of it less predatory/cruel.

    “Transparent taxation,
    For our nation!
    Horizontal and vertical tax
    With plenty of personal contact and complete sets of facts.”

    Any offers on any snappy slogans for our campaign which are quick to the mouth and stick in the brain?

  • Tristan Ward 5th Jun '24 - 2:12pm

    “a deeper, more troubling reality: the Tories have, over time, alienated their once staunchest supporters — pragmatic economic thinkers and investors.”

    Why on earth is this a “troubling reality? It’s fantastic news.

    “pragmatic economic thinkers and investors” are and ought to be prime voters for a pragmatic economically sensible liberal party like us.

    From the preamble to the constitution:

    “We will foster a strong and sustainable economy which encourages the necessary
    wealth creating processes, develops and uses the skills of the people and works to the
    benefit of all, with a just distribution of the rewards of success.

    “We recognise that the independence of individuals is safeguarded by their personal ownership of property, but that the market alone does not distribute wealth or income fairly”

    Isn’t the FT bang on message?

  • I don’t think it actually is our policy to merge capital gains and income tax or even charge the same rate as for income tax. The capital gains tax free allowance is just the amount of money that you don’t have to pay capital gains on, currently £3000.
    So presumably it’s just our policy to either reduce this to zero or tax the capital gains of anyone earning more than the income tax personal allowance, but presumably still to maintain it as a separate tax with a much lower rate.

  • Tristan Ward 5th Jun '24 - 3:30pm

    And if I recall correctly the FT recommended a Lib Dem =vote in 2019 and 2017, as did the Economist.

  • “I never quite understand why people who don’t make their income through traditional salaried means should benefit from a smaller tax rate via capital gains”

    That’s quite simple – a capital gain is usually the result of taking a risk with an investment, and investments are something to be encouraged. Who else is going to provide seed funding for start-ups, and capital to support the growth of companies? Or provide private funding for public works? Those activities carry a significant risk of losing some or all of your money, and it’s fair for that risk to be rewarded through the tax system. Otherwise you might as well stick your money safely in the bank and pay income tax on the interest earned.

    It’s also too easy to get distracted by the mega wealthy with their complex and inventive financial arrangements, but a lot of “investors” are ordinary people remortgaging their home or borrowing money from family to persue the dream of starting their own business, and some will fail and lose everything.

    That said, there is a strong case for reform of capital gains taxation to recognise that some investments are considerably more risky than others, and ensure that it is sustainable and productive long-term investments that benefit from the greatest incentives.

  • Peter Davies 5th Jun '24 - 3:58pm

    “a capital gain is usually the result of taking a risk with an investment”. No it isn’t. It’s usually a result of investing in risk-averse financial instruments such as unit trusts that reinvest income specifically so it can be taken as capital gains rather than income.

  • Tristan Ward 5th Jun '24 - 4:31pm

    “a capital gain is usually the result of taking a risk with an investment”. No it isn’t”

    Well sometimes it is and sometime it isn’t.

    “A risk-averse financial instruments such as unit trusts”

    Hardly. As they say in the adverts, shares (including shares held in unit trusts) can go down as well as up. and you may get back k less than you invest. Especially when Liz Truss is Prime Minister and Kwasi Kwarteng is Chancellor.

    Or (more seriously) when you get a world wide pandemic like COVID or a world wide financial crisis as from 2009. There is no guarantee that any investment will always go up,. There are certainly different degrees of risk. Usually the greater the risk, the great the chance of big gain but the greater the chance of a big fall.

    The art of being a successful investor is pricing this risk correctly.

  • Nonconformistradical 5th Jun '24 - 5:02pm

    An investment may or may not be risky.

    One thing risk-averse investors can do is use an ISA
    So investments could be put in a stocks & shares ISA

  • @noncomformistradical – holding an investment in an ISA does nothing itself to reduce risk. It makes the investment tax free, assuming it rises in value or delivers income.

  • Mark Frankel 6th Jun '24 - 7:44am

    A way to increase taxes would be to remove the single person’s discount on council tax. This would also bear down on under-occupation but alas be sure vote-loser.

  • Taxing capital gains as income would be unfair unless purchase price was adjusted for inflation and the gain could be spread over the years the asset was owned. It would also discourage investment. If libdems were to do this they’d lose my vote.

  • Andy Chandler 6th Jun '24 - 11:38am


    Hi, the author here. The fact that private investment is not happening now is exactly what the FT are saying. Lot of it is due to high borrowing rates for private loans, lot of it is just unproductive speculative investment that doesnt go into the economy and just shores up in bank accounts, and the current risks in the economy.

    It’s a lot more efficient and less costly if the Government were to tax this and reinvest this not only to help public services but to also help invest in major infrastructure projects or government assistance schemes to genuinely help private businesses who otherwise couldn’t afford to borrow to invest or expand. That’s exactly what the FT point is. There is a lot of untapped wealth which isn’t circulating into the economy.

    I think the private water company alone is enough to show that the current investment model is not working in the interest of the public/consumer needs or to invest in real term planning etc.

  • Peter Davies 6th Jun '24 - 11:39am

    @Russell Income tax doesn’t take inflation into account either. If you leave your interest in a current account paying 1% and inflation is 2% the value of your savings will fall in value by about 1% but you will be taxed 20% on the interest. If you invest in a bond that rises by 1% you will also lose about 1% pa but you won’t be taxed (assuming you have less than £300,000)

  • @Russell – The proposals aren’t too much different from the present and probably simplify matters.

  • @Peter. Big difference between 1 year inflation and 20 years inflation!
    @Roland. Er, yes. And no.
    @ Andy, ” a lot of it” isn’t.

  • Andy Chandler 6th Jun '24 - 8:45pm

    Okay Russell if you are just going to be rude because of the way I phrased things (which bearing in mind did this on my phone in hast) and not engage in debate then I don’t think this is a conversation worthy of exploring any further. The fact you just used to platform that suspect you just didn’t like the argument so decided to pick fault in that. Shame!

  • Andy Chandler 6th Jun '24 - 8:50pm

    Also I meant “in haste” before you decide to jump on that one Russell!

  • Andy Chandler 6th Jun '24 - 9:49pm

    @Russell Reports from the Tax Research, IPPR, and IFS all say that wealth in this country has gone up but private investment is down for what is needed for the economy. We’ve seen sluggish growth figures for years whilst assets, shares and stocks has still increased. If the private sector is not fulfilling that then either we start changing their behaviour by a way of tax whilst with the tax the government helps invests. Again, whilst it deviates a little in context to my piece, look at what was being said when we privatised water, it would boost investment from private capital into our Victorian infrastructure we were told which despite raising capital and dividend returns for their shareholders have not sorted out us having the worst water leakages in Europe. I’m talking about the real economy here. If nothing is done to amend that it’s putting too much faith in a broken system.

  • @Andy. Sorry if what I said came across as rude. That wasn’t the intent.

  • Nonconformistradical 27th Jun '24 - 4:39pm

    “Number of UK income tax payers leaps by 4.4m in three years due to threshold freeze”

    Extra burden falling on some of the less well off.

  • @ Nonconformistradical
    Not been able to get to a primary source, but from what has been published the direct link between the 4.4m increase in taxpayers being wholly attributable to the threshold freeze is not proven. Whilst some of the increase can be attributed to the threshold freeze part of the increase can also be attributed to an increase in the total number of pensioners and more of them having better pension provision and thus subject to income tax. What is not disclosed (by the media) is the changes in the number paying marginal levels of income tax which would be an indicator that more were paying tax because of the threshold freeze.

    My take is that whilst it is not necessarily good to tax the less well off, by taxing them, we strengthen the hand to increase the level of taxation on the small minority who hold most of the wealth and thus make the wealth available to stimulate the economy in ways trickle down doesn’t.

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