Tory in Ruling-Out-Wealth-Tax Shocker

There is a clear need to tax the largely unearned and unequally distributed wealth locked up in property. Failing to do so at a time when living standards stagnate for those not fortunate enough to live in a house worth £2m is bad politics, bad economics and bad judgement.

Hardly headline news in ordinary circumstances, but this coalition finds itself in anything but ordinary circumstances. Chancellor Osborne appears to have ruled out making the tax system fairer - specifically, by raising more from the wealth that is concentrated so greatly in the hands of so few. Furthermore, he seeks to close the gap between the Treasury's income and expenditure not by investing in the pillars of tomorrow's growth, nor by taxing idle and largely unearned wealth, but by cutting yet more from the welfare budget.

In doing so, Osborne confirms that he's on the side of the privileged, not those whose living standards and future prospects are squeezed by the continuing economic depression. Osborne is of course entitled to play to his party conference gallery, but he governs as part of a coalition with the Liberal Democrats, and for us, fairer taxation of wealth is inevitable, not least given the failure of spending cuts and cheap money to revive the economy and restore balance to the government's finances.

Who gets their way over wealth taxes and welfare spending will probably define the coalition's fate - not to mention that of the wealthiest and most vulnerable in society.

Liberal Democrats have long argued that alongside lifting the income tax threshold to take the lowest earners out of tax, the tax system must be reformed to address inequalities of wealth that blight society and hamper economic progress. The Tories have been more than happy to go along with the former, raising the income tax threshold as promised in the Coalition Agreement. But when it comes to the other end of the tax spectrum, the Tories simply haven't changed their spots; had it not been for those pesky yellow bastards, the top rate of income tax would have been cut to 40p not 45p, and now we have the Chancellor ruling out yet again taxes on wealth that are backed not only by his Liberal Democrat Cabinet colleagues in Vince Cable and friends, but by many in his own party.

There is a clear need to tax the largely unearned and unequally distributed wealth locked up in property. Failing to do so at a time when living standards stagnate for those not fortunate enough to live in a house worth £2m is bad politics, bad economics and bad judgement.

For some, a wealth tax is needed to placate Lib Dems opposed to further cuts in the welfare budget - to a social liberal, there is no such trade-off, as wealth taxes are both fair and economically efficient in their own right, whilst arbitrarily removing even more support from welfare recipients is neither.

Overnight it appears as though Osborne's determination to cut welfare spending has hardened, and the Prime Minister is sticking to his guns on bus passes and winter fuel allowance for the elderly regardless of need, preferring instead to take aim at under-25s in receipt of housing benefit - again, regardless of need. Cutting the welfare budget in this way defies intergenerational justice.

If Osborne refuses to tackle concentrations of wealth, then the gloves are off. Nick Clegg and the Liberal Democrats should not hesitate to affirm ourselves as the party of fairer taxes and ask, if not through taxes on property and assets, how the Chancellor plans to stick to his own promise of making the rich pay their share.

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