This is not a death tax...
There’s still time for the Government to turn the tables on the Tories over the inheritance tax debacle, but only if before the Finance Bill is published they take the radical line they should have taken at the outset.
Instead of ignominiously caving in to Osborne’s stunt, they should have used the opportunity to create a newer and fairer inheritance tax, whilst strenuously arguing the case that this is a tax confined to the very rich and that to relax it means that more taxes have to be raised from poorer households. At present only the richest 6% pay it (approx. those with incomes over £70,000 a year) which is less than in most other countries, much less than was paid in Britain even 25 years ago, and (as a matter of interest) much less than was paid in feudal England centuries ago.
A much more attractive alternative than Osborne’s would:
commit the Treasury to raise the threshold regularly so as to ensure that nobody except the richest would ever be liable,
freeze exemption levels above the threshold and close the loopholes, and introduce sharply progressive rates on the most valuable estates,
then hypothecate the proceeds, not to swell the Treasury’s coffers, but to redistribute it to finance long-term care for the elderly.
This would, at one go, resolve a very serious current problem about the funding of long-term care in old age and at the same time achieve a fair and generous redistribution from rich to poor which would prove extremely popular.
If that were then combined with a proper tax on the so-called non-domiciled rich – not Osborne’s footling £25,000 which would be a fleabite to billionaire tycoons like Philip Green – Labour might begin to regain its reputation for social justice and tackling inequality, which has spiralled out of control to grotesque levels in the last ten years and is now the no.1 domestic issue in Britain today.