Inheritance tax overhaul part of radical Lib Dem plans to tackle wealth inequality
Liberal Democrats have today set out bold reforms designed to spread opportunity, power and wealth more fairly throughout society and to give everyone a stake in the UK’s economic success.
The party expects these reforms to raise an additional £15 billion per year, though this is likely to grow as the rate of wealth passed down increases in the coming years.
Liberal Democrat members will debate and vote on the proposals at the party’s Autumn Conference in Brighton next week.
Overhauling inheritance tax – taxing recipients progressively on all large gifts received at the same rates as income from employment, above a generous tax-free lifetime allowance, instead of the current system of levying tax on the value of an estate left behind.
Taxing capital gains and dividends – equalising the tax treatment of wealth and work by taxing capital gains and dividends through the income tax system.
Reforming pension tax relief – introducing a flat rate of relief on pension contributions, thus rebalancing relief towards lower earners; and limiting the tax-free lump sum the wealthiest can withdraw from their pension pots.
Lifelong learning and a “Citizens Wealth Fund” – using the revenues from wealth taxation to invest in public services, fund an ambitious programme of lifelong learning to prepare workers for the future economy, and establish an independent Citizens Wealth Fund to invest on behalf of the country.
Liberal Democrat leader Vince Cable said:
“The bold proposals we have set out today represent a serious and informed response to this challenge. They follow closely on the work of the Resolution Foundation and the IPPR, which have reached similar conclusions on the policies needed to address Britain’s deep economic divides.
“While it is increasingly clear that taxes will have to rise if we are to afford the crucial public services and investment we all rely on, hard-pressed workers should not be the only ones paying up. It is time to put Britain’s wealth to work.”
According to the ONS, 44% of UK wealth is owned by 10% of households, whilst only 9% is owned by the poorest half of the population.
The spokesperson’s paper “Giving Everyone a Stake” can be found here.