Working people are facing unprecedented pressure on their household incomes. Average real wages are now no higher than they were in 2005. But while most people’s incomes fall, the wealth of multimillionaires and billionaires has reached record highs.
While millions of families are struggling to make ends meet, Porsche had a record year in 2022 and sales of superyachts have surged too. CEO pay is surging – up 23 per cent at FTSE 100 companies last year – and bankers’ bonuses are at their highest level since the financial crash. In short, wealth is being rewarded, work is not. Yet under our flawed system, this rising wealth is not being taxed fairly.
Everyone knows someone on an NHS waiting list as staff and delivery pressures leave those with serious diagnoses waiting months before they even start their care. The social care system is fractured and our schools are fundraising for basic materials as dilapidated classrooms fall down.
Of course, a strong and growing economy is a prerequisite for funding decent public services and fairly rewarding our public service workers. But fair tax also has a vital role to play. Who pays tax, and how much they contribute, are key political choices. And they have a direct impact on our essential public services and our wider infrastructure.
The money you make from working hard shouldn’t be taxed at a higher rate than the money shareholders and property investors generate from their existing wealth. But under the UK’s broken tax system, many nurses and teachers pay a bigger share of their income in tax than a hedge fund trader who profits from stocks and shares. That is simply not right.
Our day jobs are very different and trade union leaders and business leaders don’t always agree. But together, we are calling for a national conversation about how we tax wealth and how we ensure that the super wealthy pay a fairer share.
The reality of the years ahead is that if we are serious about rebuilding our public services, and providing strong foundations for investment in infrastructure and our industrial strategy, then those with the broadest shoulders will need to play a bigger part. The TUC has called for capital gains tax rates (currently 10 to 28 per cent) to be equalised with income tax rates (20 to 45 per cent). Together with removing exemptions, this could raise more than £10bn a year.
There are other options to explore as well: how do we tax wealth and assets fairly? The loopholes that allow the super-rich to dramatically reduce tax bills must be closed. It cannot be right that billionaires pay a lower tax rate on their family wealth than working families.
How do we ensure our high streets can compete on a level playing field with the online giants? For more than a decade the government has been tinkering with corporate tax but the likes of Amazon and Google still pay a fraction of what they should. Multinational corporations should pay tax in line with national corporation tax rates, not the lower effective tax rates that profit shifting currently enables.
Ensuring HMRC is properly funded to tackle tax avoidance is an obvious early win. The think tank TaxWatch has found that the average tax inspector brings in 18 times what they cost the government. Those who are failing to pay even what is currently due also need to face proper sanctions.
We don’t yet have all the answers. But we know that across society many agree with us that a discussion on fair taxation urgently needs to start. The status quo is failing Britain. Our public services are crumbling before our eyes. Living standards are plummeting. Yet incomes for the super-rich continue to rocket.
It’s time to start talking about how we build the fairer, stronger society that we urgently need – and fair tax must play a central role.
[See also: Why are Brits on £180k so sad?]