Byers attacks inheritance tax
alexhilton Mon Aug 21, 2006 at 07:37:28 PM GMT 
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"It is unfair and punitive. It often represents a form of double taxation because it is applied to assets which themselves have been acquired from earned income that itself has been taxed".
"Increasingly, it hits people who in life have never been liable to the higher rate of income tax but in death find their assets taxed at 40 per cent. It is a penalty on hard work, thrift and enterprise. For these reasons, inheritance tax should be abolished".
"What is clear is that the architects of the tax never intended it to apply beyond the landed gentry or the very wealthy. It was aimed at a tiny majority of estates. Yet the effect of a strong and stable economy and the house price inflation we have seen over recent years means that inheritance tax is becoming a major issue in many parts of the country".
"Inheritance tax raised £3.3 billion last year. Although not a large sum in overall terms, its abolition couldn't take place without the need to raises taxes elsewhere. I would favour an increase in the level of environmental taxes".
I probably don't need to repeat that Inheritance Tax is only applied to 6% of estates - though it is because of this that it seems almost the fairest of taxes. The £3.5 billion it raises is spent on services of benefit to the whole nation, making it our most progressive means of redistribution, even though it is a tiny part of government revenue.
There is a strong argument that the rate of Inheritance Tax should be increased, or even banded so that larger estates pay at a higher rate. The most important reform of inheritance tax law should be the inclusion of the Monarch. Thirteen years ago, the Queen did a deal with John Major excluding "Sovereign to Sovereign" bequests from inheritance tax liability.
Byers' assertion that the £3.5bn lost through the abolition of the tax should be raised through environmental taxes displays a worrying lack of understanding of taxation from a former Cabinet Minister. The point of environmental taxes is to reduce revenue over time to the benefit of the environment. Environmental taxes that don't reduce consumption could be considered failures, which is why London's congestion charge was a success, even though the financial model initially failed.
Paying tax remains one of the few patriotic things most members of the British public do outside of the realm of sports. If Labour MPs start undermining the value of taxation, then there will be no-one left to defend the last piece of Marxism that it's still widely acceptable to support - "from each according to his ability to each according to his needs".
