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Should inheritance tax be scrapped?

August 17, 2007

Scrap the tax?A Conservative Party policy group has recommended scrapping the unpopular inheritance tax.

At the moment, only estates worth more than 300,000 pounds are liable for the tax. The government says that means the levy is paid on only about 6 percent of estates.

However the Tories say soaring property prices mean many more people, who wouldn’t be described as rich, will find themselves in that bracket in the future. 

A recent poll found the public rated the tax as the most unpopular levy they had to pay, worse even than council tax.

What do you think? Is the tax an unfair punishment or will scrapping it mean the rich will get richer?

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Comments

1: The price of an average home is now around £181,000. However,in London, average home values area already in excess of the current £300,000 IHT nil rate threshold, and in the South-East, East, and South-West, they are on target to breach this in the next few years given current projected increases.
2: IHT is a fundamentally inequitable tax, as it is levied on the estate accumulated by a deceased person who has already paid various taxes, most significantly on their income.
3: With house prices rising at their current rate, real incomes not even close to keeping pace, and the current largely unreformed state pension and benefits system, a major trans-generational trasnfer of wealth is already taking place. Given that IHT is paid by the beneficiaries of an estate, it simply compounds the problem.
4: IHT reform or abolition is therefore certainly something worth considering. What a shame though that this ‘suggestion for a policy, maybe’ has been promoted in such a politically inept way, and not as part of an overall reform package to make tax and national insurance intrinsically fairer and more transparent. Consequently, whatever the merits of the case, this reform proposalis likely to perceived as the Tories looking after the rich.

Posted by Alex Bone | Report as abusive
 

If your article fairly summarises the Deadwood proposals its hardly surprising that the Tawdries anguish in the polls.
Tinkering with £4b or so (less than 1% of total taxes?) may buy saloon bar votes but it is hardly significant to the economy. Company profits tax may be higher than abroad but large co’s seem less and less taxable as they move their domiciles and finance their operations by borrowing. So any reduction may help smaller private co’s a bit. Its hardly likely to be much of an incentive because the important tax to owner managers is that on income (both income tax and NICs).
Was anything mentioned on land taxation? Of course not. Or on business rates? The latter are an enormous burden on companies trying to compete against (e.g.) Chinese co’s which are given land free of cost by local government and are supplied with subsidised energy. Their exports are then priced in an undervalued currency. I’m not advocating that such distortions are introduced here – we had them up to the 1980′s.
But any UK political party needs to tailor its fiscal policy to the consequences of running a high cost, not very productive and slow changing economy on tick.
Neither the Tawdry party’s saloon bar nostrums nor the Withdrawal of Labour party’s tax and borrow dreamworld are sustainable – if only the
self regulating mechanism that pricks stockmarket bubbles could do the same to policies that as Deadwood admits are concocted to be sellable (english?)in a democracy such as ours.

Posted by Edward Martin | Report as abusive
 

Unnecessary tax, nearly always levied at a time when grieving people are coming to terms with lost. What right does government have to a persons estate over the rights of a relative?

Inheritance tax is right up there for me with Stamp duty – a pointless payment with no real indication why it should be paid.

Posted by Danny Quinn | Report as abusive
 

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