Some countries charge a wealth tax. A recent initial paper about whether the UK charge a wealth tax raises many questions. Some of these questions are as follows:-
- What is a wealth tax? A wealth tax may be charged on the value of what a person owns and may be payable on an annual basis and as a percentage.
- What should count as wealth? Would the tax be charged on the value of pensions or your home? Those assets may have a high value but the cash to pay tax on them cannot be (easily) realised. Some assets, such as fine art or shares in a family business, may be difficult to value. What happens if value changes?
- Who to tax? Should wealth be assessed by individual? Should couples be assessed together and if so, is that only married couples or does it extend to cohabitants? Should it be a tax on wealth per household? What if you are British but you live abroad or you own assets abroad? What if you are not British but you own assets in the UK?
- How would it interact with other taxes? How would it interact with inheritance tax, capital gains tax, LBTT, and income tax? Would there be duplication of tax and if so would there be credits given for one tax against payment of another tax? What about devolved taxes?
- Would it distort behaviour? Would it drive investments to be moved or changed and what impact would that have on the tax take?
- How would it be collected and enforced? What about the cost of that?
We await the final report which will model various options and debate the advantages and drawbacks of a UK wealth tax, but ultimately the decision is for the government to make.