An anti-poverty campaign group has urged ministers in Scotland to consider introducing a local inheritance tax as way of tackling wealth inequality.
The Tax Justice Network believes a country’s tax and financial systems are the best tools to create a just society that gives equal weight to the needs of everyone. However, the network says that under pressure from corporate giants and the super-rich, governments have “programmed these systems to prioritise the wealthiest over everybody else, wiring financial secrecy and tax havens into the core of our global economy”.
Alex Cobham, chief executive of the network, said if brought in, local inheritance taxes would help cut the divide between rich and poor and raise revenue for frontline services, as reported by the Scottish Daily News.
Local levies under devolution
Inheritance tax – which sees a 40% rate on estates over £350,000 – is reserved to Westminster but under the devolved settlement the Scottish Government can create local levies, such as the workplace parking levy and proposed tourist tax.
The new level would be imposed on estates that exceed a certain value in addition to the existing inheritance tax.
IPPR report
The Institute for Public Policy Research (IPPR) published a report examining the scope for the Scottish Government to bring in new taxes, including a local inheritance tax. If taxes of 10 percent and 20 percent on assets worth more than £36,000 were applied, this could bring in £100 million/£200 million for council services.
The UK Government’s fiscal watchdog, the Office for Budget Responsibility, has said that is expects inflation to peak at about 9 percent by the end of 2022, the highest rate for more than 40 years.
The Chancellor Rishi Sunak has not increased benefits to people out of work and the Resolution Foundation has warned that some 1.3 million people will be pushed into poverty next year because of the cost of living crisis.
Benefit caps
The Scottish Government has announced that it will raise the Scottish child payment to £25 a week by the end of the year and spend £10 million annually in an attempt to deflect the worst of the UK Government’s benefit caps.
Mr Cobham is a member of the Scottish Government’s Poverty and Inequality Commission. He said the announcements made by the chancellor last week will “simply let poverty rip” and that the failure to even maintain existing benefits will add sharply to the number of people living in poverty in the UK and in Scotland.
He added that the need for the Scottish Government to explore additional, progressive revenue raising powers had never been greater.
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