Wealth Tax Urged as Top Economists Back Progressive Reform for UK Budget

Britain stands at a potential turning point in its approach to wealth and fairness. A group of leading economists, including renowned French authority on inequality Thomas Piketty and Indian development economist Jayati Ghosh, have called on Prime Minister Keir Starmer and Chancellor Rachel Reeves to lay the groundwork for a new wealth tax. Their open letter, sent ahead of the autumn budget, proposes a bold step to address the entrenched inequalities in the UK and secure funding for essential public services.

With increasing scrutiny on the widening gulf between the very wealthy and the rest of the population, the economists argue that the current tax system is overdue for a substantial redesign. They point to the fact that wealth in the UK has become highly concentrated, leaving millions struggling for a basic standard of living. The proposed wealth tax, pitched at a modest rate on assets over £10m, would affect only a tiny fraction of the population but could raise tens of billions of pounds for the public purse each year.

Distinct voices within Labour and from trade unions have urged similar measures, viewing wealth taxation as both a moral and fiscal imperative as Britain faces a multibillion-pound shortfall. The campaign group Tax Justice UK estimates that a 1 to 2 percent levy on fortunes above £10m could yield as much as £22bn annually, with only 0.04 percent of the population impacted. Proponents insist this would allow the government to safeguard vital services without reverting to austerity.

However, cabinet division is apparent. While figures such as former party leader Neil Kinnock advocate for action on wealth, business secretary Jonathan Reynolds has criticised the idea as unworkable. The Treasury currently favours leveraging existing mechanisms such as capital gains tax and inheritance tax to address fiscal challenges, citing concerns that a new wealth tax could deter investment and prompt the ultra-rich to move assets offshore.

The economists counter these objections, maintaining that international cooperation and careful design can overcome administrative and avoidance pitfalls. They urge the government to initiate consultation at the autumn budget, collecting expertise to ensure that a wealth tax is targeted, effective, and robust. The spectre of countries like Spain, Norway, and Switzerland deploying successful models is raised as evidence that such reform is feasible.

Rachel Reeves has reiterated Labour’s pledge to protect the take-home pay of working people and to avoid raising the core rates of income tax, national insurance, or VAT. Yet the pathway to a more progressive tax system, as put forward by Piketty and his colleagues, could position Britain as a leader in combating inequality while shoring up the nation’s finances in a challenging economic environment. The autumn budget looms as a critical juncture for fiscal policy and the values it reflects.