Campaign reply - Please support the Early Day Motion calling for a wealth tax and not a National Insurance hike!

Thank you for contacting my office. I very much appreciate you getting in touch.

As a principle, I never sign early-day motions as they very rarely achieve anything whilst at the same time running up costs to the taxpayer. However, I take note of your views on a wealth tax as an alternative to national insurance rises. 

The issue of funding social care is a difficult one and very important to many constituents for a variety of reasons. With an ageing population in Cornwall who are living longer, these funds need to be found, and the issue will only become more pronounced the longer we leave it.

The 1.25 per cent Health and Social Care Levy on earned income will raise almost £36 billion over the next three years, with money from the levy going directly to health and social care across the whole of the country. I will of course, be lobbying to ensure Cornwall gets its fair share. Many economic commentators agree that only a broad-based tax base like Income Tax, VAT or National Insurance contributions can raise the sums needed for such a significant investment. This could not be raised by taxes on wealth, which currently raise: £6 billion from Inheritance Tax, £8.7 billion from Capital Gains Tax and £12.3 billion from property transaction taxes.

As set out by the Wealth Tax Commission, the UK’s taxes on wealth are on par with those of other G7 countries. If considering inheritance tax, capital gains tax, and stamp duty land tax, the UK is among the top of the G7 countries for wealth taxes as a percentage of total wealth. It is also right that the Government has already frozen inheritance tax thresholds until April 2026, which is projected to raise nearly £1 billion.

It is important to note that the Levy is a progressive way to raise money. Additional rate taxpayers make up just 2 per cent of individuals affected but will contribute nearly 20 per cent of the revenue raised from people. The highest-earning 14 per cent will pay around half the revenues. The UK is also the only G7 nation with a Primary Threshold below which people do not pay any social security contributions, so 6.2 million individuals earning less than £9,568 will not pay the Levy. The Government is also making sure that those with dividend income pay their fair share, which is why the Government will also increase the rate of dividend tax by 1.25 per cent from April 2022.

We must now help the NHS recover to provide much-needed care to our constituents and the people we love – and we must provide the funding to do so. We are doing this in a suitable, reasonable, and fair way.

Thank you once again for getting in touch, and if I can be of further assistance with any other matter, please do not hesitate to contact me.