The Tories Will Aim To Cut Inheritance Tax
According to this article on the BBC, a future Tory government would end Inheritance Tax on family homes up to a million pounds.
I have form in opinions in this area and had a letter published in the Financial Times in 2006 about this tax, after an article in the paper on March 31st 2006 advocated the killing off of the tax. This is the first two paragraphs of the letter.
I have been against inheritance tax for years, not because I would benefit from its abolition or because I am getting to that age, when I should start to do something about it (“Inheritance tax should be killed off”, March 31). It is just that as a control engineer by training, I think it does untold secondary damage.
Consider: how many bright minds are employed on both sides of the inheritance tax war in avoiding and collecting the tax? Abolish it and they would have to do a proper wealth-creating job.
I still believe that the Inheritance Tax should be abolished, if not totally, but substantially! I don’t have current figures but in 2006, it only raised half as much as Air Passenger Duty in that year. I’m not alone on thinking this way as this article from the Telegraph in 2013 shows. This paragraph is from the article.
Yet the tax raises just £2.9bn a year, a mere 0.18pc of GDP, a tiny sum given all of the collateral damage caused and one which could easily be recouped by accelerating the Government’s savings programme.
David Cameron’s proposals are welcome, but pretty timid and will only have a limited positive effect on the economy compared to what full abolition will have.
The tax revenue would have to be replaced and as a BBC survey showed in 2006, that people would prefer a couple of pence on Income Tax. These days other and better options exist. The problems with abolishing Inheritance Tax are all political rather than economic, as if the Tories went for full abolition, the Labour Party would have a field day, saying they were looking after their friends.
They’ll probably do that with David Cameron’s announcement, even though probably nearly half of the beneficiaries of the tax reduction will be Labour voters.
The Anonymous Widower 