The STUC had motions debated which called for the devolution of IHT, the introduction of a wealth tax which would be charged annually and based on asset value, and the introduction of a property value tax.
They stated that this package of measures would raise an additional £1.3bn this year rising to £3.3bn by 2026. The devolution of IHT would mean that the Scottish government could lower the threshold at which this tax is paid from the current £325,000 or raise the level of taxation applied on assets above that level.
The 1% wealth tax would be made on total household assets above four different threshold points, ranging from £1 million to £10 million raising £1.426bn annually from an estimated 12% of households. Wealth is defined as including your home, your pension, or any precious items you may have bought or inherited throughout your life, and anything the state deemed valuable to include in their assessment.
A further £450m would be raised by replacing council tax with a Proportional Property Tax (PPT) where households pay a percentage of the value of the property each year. PPT is a replacement for council tax where a smaller number of more affluent householders pay more tax depending on the value of their home.
The STUC’s proposals are backed by the SNP’s partners in government the Green party with Ross Greer stating: "The richest people in this country aren't paying their fair share under Westminster tax policies. Devolving the power to tax them properly is essential to building a fairer Scotland, so the STUC is absolutely right to call for basic financial powers like inheritance tax to come under the Scottish Parliament's control."
Humza Yousaf has already committed to working closely with the STUC as First Minister and this week he proposed a doubling of council tax charges on those with second or vacant homes in Scotland. Clearly seeing in him a kindred spirit the STUC have called on him to further target homeowners and people with assets through this array of wealth taxes.
However, there is an assumption by the STUC that if you simply charge more taxes, you gain more revenue. This is based on the fairly naïve view that people will simply sit back and accept this attack on their homeownership and their savings.
The reality is that there would be a flight from Scotland of anyone with assets, of entrepreneurs, of older people who have built up value through decades of saving and homeowning, and of families who would be rightly fearful that they would sacrifice their children’s inheritance to government policy.
The assumption that this would only impact ‘rich’ people is laughable as IHT is already charged on all estates valued at over £325,000 and this is frozen until 2029. Most people with assets at this value do not call themselves rich. It is the price of a first-time buyers’ flat in Edinburgh.
These policies would severely impact ordinary people. Teachers, nurses, the police force, people who have saved and invested in their homes over decades would suddenly see their nest egg eroded annually by such policies.
While this remains only a proposal by the STUC at present it would represent an enormous shift in tax policy for Scotland punishing Scots who saved, who bought homes, and who worked to create assets to pass on to their families. It would act as a severe disincentive to homeownership in Scotland and turn the country into a place where people would be reluctant to live or to invest.
David Alexander is CEO of DJ Alexander Scotland Ltd
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