Scottish Secretary Ian Murray gives wealth tax verdict as deputy prime minister Angela Rayner pushes for move
The Scottish Secretary said a tax on the highest income earners would lead to ‘flight’ of wealthier people abroad.
Scottish Secretary Ian Murray has dismissed calls from within the Labour Party to introduce a wealth tax, insisting it “doesn’t work”, as the UK government comes under growing pressure to plug a £51 billion black hole in the public finances.
Speaking at an event at the Edinburgh Festival Fringe on Thursday, Mr Murray said the cost of bringing in the wealth tax would be “huge” and would lead to the “flight” of wealthier people abroad.
The assertion comes after former Labour shadow chancellor Anneliese Dodds said the Treasury should consider a wealth tax.
She is among a growing number of the party’s MPs calling for further wealth taxes to help raise money.
A leaked memo previously showed Deputy Prime Minister Angela Rayner pushed for taxes targeting wealth ahead of the Spring Statement in March.
It has also become popular among unions and other left-wing parties, including the Greens and Jeremy Corbyn’s new, unnamed party.
The Scotsman reported earlier this year that Scottish ministers were poised to ask the UK government for the power to introduce wealth taxes after the next Holyrood election.
SNP Finance Secretary Shona Robison has called on Chancellor Rachel Reeves to “seriously examine” introducing wealth taxes to ensure further boosts to defence spending does not come at the expense of drastic cuts to public services.
The Bank of England said Ms Reeves’s £25 billion National Insurance raid, announced in her first Budget last year, had contributed to sluggish growth and pushed up food prices, as it announced the fifth interest rates cut in a year on Thursday.
The UK’s central bank chose to reduce the base rate to 4 per cent from 4.25 per cent, as it forecast inflation would rise to 4 per cent next month.
Speculation has grown that Ms Reeves will be forced to raise taxes in her autumn Budget.
Mr Murray was asked about the wider issue of wealth taxes while appearing as a guest on Matt Forde’s Political Party show during the Fringe.
Asked if those around the Cabinet table were coming round to the view there should be a wealth tax, the Scottish Secretary said: “Well no, it doesn’t work. You see that – the Laffer curve is there for everyone to see.
“So yes, you could bring in a wealth tax because it might make you feel principally better. “e might bring in a few hundred million pounds, but the cost of doing that would be huge because there is just flight, whether we like it or not.
“The French did it really badly, the Norwegians really badly. So the places that have done a wealth tax have rowed back from it on the basis that it doesn’t raise them any money.
“So every single principled decision we have to make has got to be on the basis of does it raise more money, is it fair, is it equitable, will it resolve the situation? If the answer to any of those questions is no, we shouldn’t do it.”
Mr Murray added: “It doesn’t work, I wish it did, but it doesn’t. The only real palatable option is to grow the economy, which is why are putting every single effort into doing that, bringing in more money.”
Comments
Want to join the conversation? Please or to comment on this article.