Pressure is mounting to create new methods for wealth taxation as fiscal challenges arise. Economists estimate that 20bn to 50bn must be raised to balance spending with tax revenue. MPs have proposed a 2% annual tax on assets over 10m but face challenges in implementation due to the difficulty of monitoring the wealthy. HMRC's lack of data on millionaires and billionaires hampers policy creation. The Treasury is also influenced by outdated economic perspectives, which argue that high capital taxes can deter investment and hurt growth.
The fiscal picture is looking fairly bleak, with economists estimating that Rachel Reeves must raise 20bn or even as much as 50bn to balance day-to-day spending against tax revenue.
MPs want the chancellor to squeeze the richest harder, proposing a 2% annual tax on individual assets over 10m, but implementation is complex due to monitoring challenges.
HMRC lacks accurate figures on the number of millionaires or billionaires in the UK, complicating policy formulation and administration due to unreliable household wealth data.
Treasury figures are influenced by economists from the 1980s and 90s, leading to an orthodox view that excessive taxation on capital will stifle investment and growth.
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