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.