Call for new taxes on wealth windfalls
TWO of New Labour's most influential policymakers have called for new taxes on those who inherit or are gifted large sums of money.
Anthony Giddens, who devised Tony Blair's 'Third Way' politics, and Patrick Diamond, a No 10 policy co-ordinator until the election, are arguing for a tax on capital transfers by the better-off.
All gifts made during an individual's lifetime - as well as inheritances - would be liable for tax under their plans. That would mean parents who hope to avoid inheritance tax by transferring wealth to their children would be penalised.
The pair claim the 'steady rise of inequalities in the distribution of wealth' in Britain must be tackled. 'The accumulation of wealth is excessive and unjust where it arises not from hard work and risk-taking enterprise, but from 'brute luck' factors such as rising returns on property and land,' they said.
'The Government should look again at a capital transfer tax extending beyond simply inheritance, and including all lifetime gifts.'
Lord Giddens, a professor of sociology at the London School of Economics, and Mr Diamond, now a senior visiting fellow at the college, said the money generated should be used to pay for a flat-rate benefit to low-income adults 'participating in the community'.
They put forward their ideas in a book, The New Egalitarianism, an extract of which is published in this week's New Statesman magazine. Currently, a 40% inheritance tax is imposed when someone dies leaving assets of more than £275,000. Increasing property prices mean an estimated 2.4m home owners fall into the trap.
Last night the Treasury distanced itself from the idea. A senior source said: 'Mr Diamond is a former adviser to Peter Mandelson and Alan Milburn, but he has never been nor will he ever be an adviser to the Treasury on tax matters.'
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