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Osborne torpedos Clegg's wealth tax

Chancellor says proposed tax would "drive away the wealth creators and the businesses".

By George Eaton Published 29 August 2012 11:29

Chancellor George Osborne. Photograph: Getty Images.

George Osborne warned that a wealth tax risked "driving business away". Photograph: Getty Images.

The submarine Chancellor has risen to torpedo Nick Clegg's proposed wealth tax. In his first broadcast interview since returning from holiday, George Osborne told ITV: "I am clear that the wealthy should pay more which is why in the recent budget I increased the tax on very expensive property transactions. But we also have to be careful as a country we don’t drive away the wealth creators and the businesses that are going to lead our economic recovery." In other words, it's a non-starter.

Osborne's stance is short-sighted. As I wrote earlier, taxes on wealth are both more progressive and economically beneficial than those on income. By shifting investment away from unproductive assets and into wealth-creating industries, they can increase growth (something the British economy conspicuously lacks), rather than reduce it (as taxes on consumpation and income do). For the Tories, who cannot afford to be seen as the party of the rich in an age of austerity, heavier taxation of wealth also makes political sense. As ConservativeHome editor Tim Montgomerie argued this morning:

A reasonable wealth tax can be used by the Conservative Party to signal that we are not the party of the privileged and already propertied in the South East but also the party of the young northern entrepreneur or homebuyer who is starting out in life. More taxes on mansion owners in the south to fund less taxes on younger people starting out in life. If the Conservative Party embraces such a policy it's the nearest thing we have to a Clause IV moment

But Osborne, wedded to conservative dogma, is still unwilling to recognise as much.

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Tags: George Osborne Nick Clegg

More from George Eaton

View the discussion thread.

13 comments

Thu, 2012-08-30 17:37 — RH47

Surprise, surprise. Why would a wealthy turkey vote for Christmas?

It's not Tory dogma - that's just a cover for lining the pocket.

Thu, 2012-08-30 10:27 — Brenda Braithwaite (not verified)

Who cares if it drives all the wealthiest people away? What good are they to us?
The economy is suffering because the squeeze on ordinary households has prevented any movement in the economy as people stay at home and try to make sure they have enough to live on for the month without having to resort to a payday loan. On the other hand the top 1% have so much money that they don't know what to do with it. One thing is for sure though, is that they are not investing it in the UK economy and not hitting the high streets to get the economy moving again. Like the Banks, they are sitting on it, or investing it elsewhere. Perhaps cocaine might become the strongest currency, stronger than gold, who knows. There is enough money in the country for the economy to start moving again if those who are in a position to spend in the UK began to do so. They are not suffering like the rest of the electorate from austerity so there is no reason for them to sit on the fence doing nothing. If all their investment is elsewhere than the UK, they would be as well living wherever it is.

Thu, 2012-08-30 08:28 — Trotwood (not verified)

Where are we going to drive the wealthy to Gideon seeing as most countries are, economically, in dire straits? Syria maybe.

Thu, 2012-08-30 01:36 — mamamia (not verified)

Has austerity been used to set up milking of the country?
Has Clegg finally realised that he is one of the milkmaids?

Wed, 2012-08-29 16:36 — matthew fox (not verified)

I see the Yougov poll has Labour with a 12 point lead over the tories.

Thu, 2012-08-30 12:56 — Red Rain (not verified)

Despite stubbornly high youth unemployment, government reforms of the welfare state, the funding of the NHS, increasing homelessness all evidence of the inadequacy of a capitalist market economy – there is little evidence of any public support or enthusiasm for socialist alternative policies. True, the opinion polls show the Tories lagging well behind Labour, but this is attributable more to discontent with Cameron’s government than any positive faith in the ability of the Labour party to provide a feasible alternative. This is hardly surprising, since the Labour Party has not only abandoned any pretense of advocating socialist policies but is even seemingly incapable of forcefully arguing for an alternative method of administering capitalism to that practiced by the Tories.

Wed, 2012-08-29 17:54 — Michael Dixon (not verified)

Good for them.

Kinnock was 20% ahead of Thatcher

Wed, 2012-08-29 19:14 — matthew fox (not verified)

Now now Michael no one likes a sourpuss. Just because my poll lead is bigger then your poll lead, don't take your bat and ball home.

Wed, 2012-08-29 15:21 — Michael Dixon (not verified)

You are very desperate if you are quoting conservativehome's Tim Montgomerie from a website that has total contempt for Cameron, Osborne and Ken Clarke and anything remotely to do with the Liberal Democrats. Lord Ashcroft is there in the background, Nadine Dorries writes for it regularly and Lord Tebbit is the hero of many of the dailycomments from right wing Tories. And then there are UKIP writers plus the other mischief makers.

Amazed Mr Eaton would use this right-wing source as a support to criticise Osborne or anyone remotely sensible in politics. He must be desperate.

Has the Party which knighted Sir Fred, encouraged Sir Victor over cocktails and watched the bankers get rich, not got anything to say that he can quote rather than the right of the Conservative Party?

No? Hardly surprised. No wonder Labour are only 5% ahead in a recent opinion poll. Useless.

Wed, 2012-08-29 13:18 — Mr Bingham (not verified)

No surprises there because George Osborne has only just given the richest in society a tax break at the last budget. I did not hear Nick Clegg complaining then !

Maybe Nick Clegg would have more credibility if he refused that tax break, possibly even demand a review on George Osbornes tax break to the richest in society in that last budget with the view to cancelling it.

Would Nick Clegg do that ?

The rich get richer in this country whilst the rest of us suffer the deficit reduction and austerity measures so that the rich do not have to suffer the same financial hardship.

David Cameron's election campaign statement " We Are All in This Together " has turned out to be a complete and utter insult to the rest of society. We have all been taken for a ride and conned, well and truely.

Wed, 2012-08-29 19:17 — matthew fox (not verified)

Is a new strategy, hug a tax cheat. I find it odd tax cheats are going to be rewarded with a tax cut.

How many bankers, involved in the Libor scandal, will get a nice windfall from Gideon.

I see Gideon is keeping quiet on the amount RBS will be fined for their part in the Libor scandal.

Don't you find it odd Stephen Hester knew about the scandal for years, but was too busy trying to get his bonus?

Wed, 2012-08-29 12:39 — BobRocket (not verified)

We all know Osbornes position (taxes are for the little people) but what about yours George Eaton.

You wrote 'By shifting investment away from unproductive assets and into wealth-creating industries, they can increase growth (something the British economy conspicuously lacks), rather than reduce it (as taxes on consumpation and income do).'

Does this mean you would be in favour of a Land Value Tax ?

Wed, 2012-08-29 11:56 — matthew fox (not verified)

Wealth creators, i see Osborne is still stuck in the 80s.

Does he include Asil Nadir, tory donor who has been banged up for ten years.