Addressing the Conservatives reputational deficit – the case for a Tory wealth tax

21^st April 2015

As other journalists and commentators have noted, despite the impressive achievements of the Conservatives in coalition – jobs up, incomes increased and bureaucracy streamlined – the party still has a reputation for cut-throat ‘nastiness’ and serving entrenched privilege.

As current polls show, voters have little patience for this when they have yet to feel the tangible effects of the economic recovery and equality of opportunity seems to be ever decreasing. Graduates are stuck in unpaid internships or low-paid jobs, households are still reliant on consumer credit to get by and the British dream of owning a home seems more like a fantasy for many.

David Cameron has obviously sensed this, and has tried to soften the Tory brand through a range of both social and economic policies like marriage equality, increases in the minimum wage and a revival of right-to-buy.

However, all of these policies have the conservatives playing catch-up with the labour and other left-leaning parties. Embracing these policies has helped the Tories seem more ‘in touch’, but much less radical and increasing offering less of an alternative to Labour to those who don’t vote with a macro-economic view in mind.

If you were worried about being able to afford a house, would a tax on those who own mansions or the right for those already in social housing to become homeowners sound more appealing?

It may be too late now, but if the Conservatives were to grasp the nettle and begin to introduce the idea of wealth taxes, perhaps the recovery would begin to seem more for the many than the few.

A move away from income taxes to wealth taxes, whereby accumulated wealth and assets were taxed rather than income earned would be a genuinely bold and revolutionary new direction for the conservatives.

Wealth is increasingly becoming more unequal that income. Piketty’s groundbreaking work on the subject makes a convincing case that the rate of returns on capital (property, assets, investments) are consistently greater than the returns from economic growth. This means that returns from wealth are greater than growth in real incomes, causing inequality in real-terms to widen.

Wealth taxes would be progressive, pro-market and pro-aspiration.  A tax on the consumption of luxury goods such as yachts, mansions, landvalue and trust funds would be a far more transparent and simple way of transferring the burden of contribution onto those who enjoy established wealth through investments on inheritance with the added benefit of levelling the playing field for others.

The conservative case for wealth taxes has already been made by others. Such a tax would capture pension, housing and inheritance inequality in one fell swoop. Whereas at the moment income is relatively flat (after tax) and so these other forms of wealth promote disparity of wealth and the opportunity it brings.

Last week Rod Liddle commented that Labour seems to be the only party with the instinct and appetite to address this fundamental – and growing – issue. Perhaps if the Conservatives find themselves on the opposition benches after the 7th of May, it could be time for a return to Thatcherite polices that favoured those who work hard, not just those born wealthy.