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A wealth tax in the UK “has to happen”, a senior Labour peer said after the party was forced to quash suggestions it was proposing one to pay for the coronavirus crisis.
Lord Stewart Wood, who worked in the Treasury, told HuffPost UK’s Commons People podcast he was “quite glad” shadow chancellor Anneliese Dodds floated the idea even though it caused “trouble in the short term” for Labour.
The peer, who worked with Gordon Brown and Ed Miliband, suggested a “jujitsu move” to tax income less and wealth and assets more would have “quite strong popular support”.
Labour was forced to shut down suggestions it wanted to tax wealth as a way of paying for the huge spending required to get through the Covid-19 crisis.
But Boris Johnson seized on the confusion about Labour’s position at prime minister’s questions this week, declaring that Labour want to “tax tax tax” whereas the Tories want “jobs jobs jobs”.
Wood revealed Miliband “seriously considered” the idea when Labour leader, but eventually favoured a mansion tax as a “proxy for a wealth tax” because “anything more than that would be too much”.
But he said: “I think a wealth tax has to happen personally.
“It’s something that when I worked for Ed Miliband we looked at.
“Strangely the Treasury is a big fan of the wealth tax – the idea that we’d be taxing land and housing, two factors of production as an economist would call it that are totally undertaxed at the moment.
“So purely from an efficiency point of view there’s a case for it.
“We’re in a world where we know that down the line there’s going to have to be tax rises, there’s no way we can afford this extraordinary public expenditure and not support it with tax rises down the line.”
Wood said Labour’s mistake over the past week was getting stuck talking about tax instead of making the case for more short-term borrowing to fund measures to save people’s jobs.
“If Labour made a mistake this week it was letting the tax question get in front of that question where you’ve really got to fight for the space for that to happen,” he said.
The peer also suggested he had sympathy with the party leadership for backing away from the idea of a wealth tax, insisting big changes to tax policy need at least a year of work before being revealed.
“It’s too soon to have properly fleshed out proposals,” Wood said.
“I’m quite glad a wealth tax was floated by the way even though it caused them some trouble in the short term.
“Because it has to be out there on the agenda in my view.
“The lesson of this is – you spend a long time preparing these things and when you are ready to go you have tedious documents galore that you can bombard and you get nerds like me to go out and do policy seminars on them.
“You’ve got to do the really hard digging in terms of preparing a way with detailed proposals and consultation before you go live.
“If you want to do anything on tax you have to do that.
“What Gordon Brown did back in 2003 with national insurance increases, you spend a year basically doing the really hard work and then you suddenly launch it on the world.”