New Wealth Taxes

Christopher Chope Excerpts

Tuesday 14th June 2022 Westminster Hall

[Sir Christopher Chope (Christchurch) (Con)]

Does the hon. Member realise that there is nothing to stop those wealth owners who support a wealth tax making voluntary contributions to the Exchequer?

[Richard Burgon]

I thank the hon. Gentleman for his illustrative intervention, but I would paraphrase a former Labour Prime Minister, Clement Attlee: charity as a substitution for taxation can be a cold, heartless model. We should not be depending on the voluntary generosity of those at the very top to fund our public services. That creates a scenario that is almost servant and master—blessed is the giver and blessed is the receiver.

The UK does not have a wealth tax. Ministers have previously responded to me by saying that in practice we do, through taxes such as capital gains tax, but, while those earning wages are taxed on every penny of their income above permitted allowances, the same does not apply to the accumulation of wealth. For example, capital gains tax does not apply to all wealth but only to increases in the value of particular items of wealth. Structurally, we tax income much more rigorously than we do wealth. Of course, that favours the wealthy, as it is designed to do. I am afraid it is simply not good enough to pretend that even that system is working.

--- Later in debate ---

[Sir Christopher Chope (Christchurch) (Con)]

It is a pleasure to serve under your chairmanship, Sir Edward. It is important to put the other side of the argument in this debate, albeit very briefly. It is fascinating to hear Members on the left of the Labour party campaign for even higher taxes when we already have the highest taxes this country has experienced during my lifetime. Like most Conservatives, I am in support of lower taxes, which is why I voted against the increases in national insurance. I agree with those who say that it was the wrong solution.

I want to encourage an entrepreneurial society. I want to have the wealth contributors active in our society. I have just come back from a parliamentary visit to California, where there is an enormous amount of wealth. California had a surplus last year of $100 billion, which was largely on the basis of taxing the very high earners and the wealthiest people in California. However, we heard a cautionary tale. There is a worry that California’s whole network of public services is now highly dependent on the income of such a small group of people and that, with the recession—when those people may lose a lot of their wealth—the income of California will drop dramatically.

I want to mention a couple of examples of wealth taxes that are already in operation. One is in the context of stamp duty. The consequence of arbitrary levels of stamp duty is people being deterred from selling their houses—they choose not to incur the tax and stay in the house they are in. We need supply-side reform there to eliminate the problems caused by high levels of stamp duty. It is very easy to campaign and say, “That is a really expensive house. When you buy that house, you should pay a substantial amount of tax on it,” but the consequences are—the unintended consequences, as so often arise with such measures—that we have actually succeeded in suppressing the housing market and individual choice.

The other issue, which is a big one in my constituency, is the proxy wealth tax, otherwise known as council tax, which is higher for those people who have more valuable properties. There will be some people who argue that it should be even higher for those with even more valuable properties. In my constituency, I have a large number of people who are, for want of a better expression, in council tax poverty. They face council tax imposed by Dorset Council in the order of, say, £4,000 a year, which is a heck of a lot more than 10% of their annual disposable income. It is a real pressure point at the moment.

Council tax is not a fair tax, because the taxes are not related to the use that individuals make of public services—it is a proxy wealth tax—but it sounded like a good idea at the time, as a reaction to the problems over the community charge. It is the law of unintended consequences that in Dorset, large numbers of my constituents are paying disproportionate amounts of money in council tax because of the system that is in place. Because their house happens to be worth more than a house somewhere in the north of England, they are deemed to be in a position to be able to pay more tax to the local exchequer than somebody in the north of England who might be very much better off.

[Peter Grant]

Will the hon. Gentleman give way?

[Sir Christopher Chope]

I know that Scotland was where we pioneered the community charge, so I would be happy to give way to the hon. Gentleman.

[Peter Grant]

I take issue with the hon. Gentleman’s assumption that the council tax is a wealth tax. A lot of my constituents who do not own anything—who do not own the house they live in—still have to pay council tax. It is not a tax on ownership; it is a tax on occupancy.

[Sir Christopher Chope]

It is a tax related to the wealth of the property in which someone lives. If there is only one person living in that property, there is a 25% discount, but there is no discount otherwise. It is solely related to the capital value of the property, and that is why, in a sense, it is a wealth tax. I know that this is an inconvenient argument for those who are campaigning for a wealth tax, but let us be under no illusions: the council tax system is essentially an embryonic wealth tax, although the levels are much lower than the hon. Member for Leeds East (Richard Burgon) referred to in his introduction to the debate.

I do not know anybody who would be subject to the tax that the hon. Member for Leeds East suggests. He mentioned people who say they would love to be able to pay more tax. As I said in my intervention, there is nothing to stop all those socialist millionaires who have a bit of a conscience and who are arguing that everybody else other than themselves should pay more tax making their own contribution. There is nothing to stop the hon. Gentleman setting up a trust fund into which they could pay, so they could then contribute more than they are able to contribute at the moment. Why not do that?

If people want to pay more towards the costs of the state and are in a position so to do, there is a voluntary system out there. I am sure the Financial Secretary to the Treasury, my right hon. and learned Friend the Member for South East Cambridgeshire (Lucy Frazer), will draw our attention to the fact that the number of voluntary contributions made to Her Majesty’s Revenue and Customs is rather modest compared with what it could be on the basis of what those supposed billionaires want to do.

Let us keep the wealth creators in our country. Let us praise the work they do, the jobs they create and the contribution they make to our overall wealth as a nation. Let us not deter them and drive them away elsewhere. I am very much against a wealth tax and I hope the Minister will make it clear that it is in no way on the Government’s agenda.

[Sir Edward Leigh (in the Chair)]

We will have a five-minute time limit now. I call Claire Hanna.