LONDON (Reuters) – A one-time wealth tax may be a way for UK finance minister Rishi Sunak to close a huge hole in the country’s public finances caused by the COVID-19 pandemic, an influential lawmaker said Monday.
Mel Stride, chair of the parliament’s Finance Committee, said other countries such as France and Switzerland had imposed wealth taxes only to be levied back later.
“I think what might be more promising in terms of raising more taxes effectively is a one-time wealth tax,” Stride told Times Radio.
“So I think it’s probably nearing the end of the spectrum of possible-stroke-desirable question marks rather than an annual wealth tax,” he said.
However, British media last month reported that Sunak told supporters that a one-time wealth tax would go against his Conservative Party values.
Sunak’s emergency spending and tax cuts are estimated to cost more than 280 billion pounds ($ 389 billion) in the 2020/21 financial year, burdening the country with the largest peacetime budget deficit ever.
He will announce his next spending and tax plans in a budget statement on March 3.
A group of three economists, including UK Treasury advisors, published a report in December recommending a one-time tax on assets including property as a way to raise £ 260 billion.
Estimates by the Wealth Tax Commission are based on taxes that apply to any individual with an individual wealth of over £ 500,000 – or £ 1 million for a spouse – and are charged 1% a year for five years.
Raising total revenue through more traditional taxes would require major hikes in income and value-added taxes that British Prime Minister Boris Johnson set aside before the 2019 election victory, the commission said.
The Parliamentary Finance Committee has no formal role in proposing economic policy decisions.
It aims to publish a report on wealth tax before Sunak’s budget statement next month.
On Monday, he published a report urging the government to set criteria on how and when to lift COVID-19 restrictions on the economy as well as modeling to show the economic costs and benefits of such restrictions.
Johnson will this week assess how quickly Britain can get out of its lockdown but the death toll and number of hospital admissions are still too high, Health Secretary Matt Hancock said on Monday.
($ 1 = 0.7200 pounds)
Written by William Schomberg; editing by Sarah Young / Guy Faulconbridge