BRITAIN’S economy is the sixth biggest in the world. The owners of big business and finance — Britain’s capitalist class — are fantastically wealthy. They own more economic assets (worth £1,700 billion) around the world than any other capitalist class, except those of the US and the Netherlands.
 
At home, the richest 1 per cent of the population owns 23 per cent (£2,800bn) of all personal wealth (2021). The richest one-tenth own around half, and the poorer 50 per cent (which probably includes most Morning Star readers!) just 6 per cent. These Office for National Statistics calculations exclude most economic wealth.
 
Overseas cash stash
 
In addition, according to figures released to Tax Policy Associates under the Freedom of Information Act, UK residents held £850bn — yes, billion — in overseas bank accounts in 2019. It is unknown how much of this constitutes income not declared to HMRC.
 
Two-thirds (£570bn) of these funds are stashed in overseas tax havens, including Jersey, the Isle of Man, the British Virgin Islands, Bermuda and the Cayman Isles and others under British jurisdiction. Another favourite for Britain’s tax-shy rich has been Switzerland.
 
Despite repeated demands, HMRC has been reluctant to investigate levels of undeclared overseas funds and their tax liabilities.
 
Finally, in June 2024, four weeks into the general election campaign, it revealed that £40bn should have been paid in taxes in the 2022-23 financial year by Britain’s offshore account holders.
 
That alone is worth one “Black Hole” in today’s currency. And then there’s all the rest of the back tax to collect...
 
HMRC refused — presumably with the backing of the Tory government — to publish the figures earlier or to provide any detail — in order to maintain a veneer of “neutrality” at the top of the Civil Service.
 
Regardless, these latest revelations underline the urgent need to pursue tax dodgers with at least the same vigour as they chase bogus social benefit cheats (who cost the Treasury £7bn in 2023-24). Domestic tax fraud deprives the public finances of an extra £16bn a year.
 
“We will crack down on tax avoidance and evasion.” Chancellor Reeves told this year’s Labour Party conference.
 
Despite the fine words, there is no reflection of this in the Office for Budget Responsibility’s (OBR) economic and fiscal outlook and its projected tax receipts.

A Wealth Tax

Britain’s gross inequalities in wealth ownership underline the urgent need for a wealth tax levied on at least the richest 1 per cent.
 
Even at the modest rate of 1 per cent on average, and based on HMRC gross underestimates, this would rise to £28bn a year. Of course, even talk of such a measure would send the Tory Party and Britain’s gutter press into a frenzy.
 
The arguments against this are familiar: the rich will emigrate, tax receipts will go down, and economic investment will fall. The evidence for these claims is, at the very best, selective and often from blatantly partisan sources.
 
There are many different types of wealth tax across most of western Europe, applying at different levels and to different assets, whether at home or abroad. They face continuous opposition from wealthy vested interests and yet are too popular for all but the most right-wing parties to oppose.
 
Likewise, in Britain, opinion surveys indicate majority public support for such a tax on the super-rich.
 
Will our new “Labour” government introduce a wealth tax? There is no prospect of it happening soon. But the Starmer government’s tax base, even after the Budget, is frail.
 
The most powerful circles of monopoly capital have yet to agree on their political strategy after the 2024 election, whether to complete Labour’s transition to being the favoured party of big business, push for the return of the Conservative Party to be the natural party of business, capable of winning elections and becoming again the “natural party of government” — or incorporate Reform UK into the core strategy, either in place of the two main parties or through an alliance or merger with the Conservatives.
 
In the meantime, Labour MPs and the party’s affiliated unions have to decide whether they should launch an economic and financial offensive against Britain’s big capitalists — in which case the time is now — or face a series of defensive battles in a desperate struggle to serve two masters at once: the people and their labour movement on the one side, and the City of London and big corporations on the other.
 
History has shown in 1924, 1929, 1950-51, 1970, 1979 and 2010 that trying to ride two horses at once ends in defeat.
 
A financial offensive

What should an offensive include on the financial front?
 
As well as a wealth tax and the abolition of tax haven practices in British overseas territories and dependencies, higher bands of income tax should be reintroduced.
 
At present, the top rate of income tax (on more than £125,140) remains at 45 per cent, untouched by Chancellor Reeves, who pledges to keep it there for the duration of this government.
 
During the 1970s, it stood at 83 per cent until the Thatcher regime reduced it in stages to 40 per cent. Chancellor Gordon Brown lifted it to 50 per cent in 2010. The Tory-Lib Dem coalition reduced it to 45 per cent (the “additional rate”). Restoring this so-called “additional rate” to just 50 per cent would raise more than £5bn, even after tax-dodging retaliation.
 
As well as doubling the rate of capital gains tax and substantially increasing inheritance tax, other measures could include returning the main rate of corporation tax on larger company profits to 26 per cent. Even doing so by stages, as the then shadow chancellor John McDonnell proposed in 2019, would gather £24bn a year.
 
And why not a financial transactions tax? Labour’s modest proposal under McDonnell and Jeremy Corbyn would have cost the City spivs and speculators just £9bn.
 
Here’s a fact: the value of all the transactions on the foreign exchange market in the City of London is £3,200 billion... in a single day. Just a 1p in the pound financial transactions tax would raise £32bn... in a single day.
 
In reality, a barrage of reactions would make that impossible. But it puts “tax and spend” realities and reactionary propaganda in perspective.
 
Given these realities, there was no fiscal case for the Labour government to retain the two-child benefit cap and abolish the universal Winter Fuel Allowance. And so much more could have been levied in taxes in order to build one million affordable and sustainable homes a year — within the public sector — instead of relying on private developers and construction companies to build fewer than two million for-profit houses over the next five years.
 
Above all, instead of throwing almost £4bn at the failing private sector to invest in hugely expensive and risky carbon capture and storage (CCS) schemes, Chancellor Reeves should be using this public money to fund public-sector enterprise: mass-scale home insulation and solar panelling programmes, tidal power barrages, geothermal energy extraction.
 
To help meet our carbon emissions targets, too, the rapacious water, gas and electricity industries must be taken back into public ownership and planning at the earliest opportunity. And why make the switch to EV vehicles more expensive for working-class people by slapping extra import duty on top-quality Chinese imports at the behest of the US cold war-mongers?

 An alternative Budget would have served the interests of workers, the people and the planet. But the desire of the Chancellor and the Prime Minister to put the greed of big business first has trumped every other consideration.