Bring on the Bandit Tax

We’ve had the five missions, the six pledges (or was it the other way round?) and now we’ve got Labour’s spin on the triple lock. We pensioners love the triple lock, but this one’s different: no rises in income tax, national insurance or VAT, for the duration of the whole of the next parliament. Talk about locking yourself in. The Institute for Fiscal Studies suggests this triple lock will mean more significant cuts to public services. Since there will be no change to tax allowances, there will of course be an increase in the income tax take, without recourse to increasing tax rates, so the latest pledge is a bit of a ruse, so far as that goes. So, apart from some of the modest income raising schemes Labour has (ending nom-dom status, ending VAT exemption on private education, etc.) what could Labour do to raise money? I would like to suggest a ‘bandit tax.’
 
The bandit tax would be a tax raised on assets whose value has been artificially inflated thanks to quantitive easing (QE; since 2008/9 QE has amounted to £895 billion). One person who knows about these things had this to say about QE: "The particular form of QE benefits above all banks who have lots of assets - which are inflated by QE and people with assets generally [including] people in the property market, people who own companies, people in investment management like me," says hedge fund boss Sir Paul Marshall. "Owners of assets have all made out like bandits." ( ‘They were like bandits’ - how did the rich get richer? - BBC News ) As Marshall suggests, it’s not just the banks that have done well from QE, but as the main recipients of this largesse they should face higher windfall taxes (the LibDems have suggested this). Dare I say asset owners generally have benefited for doing bugger all. It might be hard for HMRC to directly distinguish between a QE bonus and a general appreciation of asset value, so the simplest solution would be to use Capital Gains Tax (CGT) to reap back something from unearned rewards. CGT should at least be levied at the same rates as income tax, but with much higher rates for the biggest gainers. Applied correctly, increasing CGT would not affect the majority of people. Funnily enough the Tories this year halved the CGT allowance and it barely seems to have raised an eyebrow. Most people will not be affected.
 
If Labour were intent on tackling the wealth inequality gap, a bandit tax could fit the bill. I very much doubt Ms Reeves will go down that road. A lot of very rich people are now backing Labour.