Fabian Society - the UK’s oldest think-tank - Defending Inheritance Tax: Fabian Debate

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Defending Inheritance Tax: Fabian Debate

The government's autumn climb-down on inheritance tax has fatally weakened Labour's mission to end child poverty, it was claimed by Barnardo's Chief Executive Martin Narey at the launch of the Fabian's new pamphlet How To Defend Inheritance Tax.

"The money that has gone into inheritance tax is almost exactly the same as needed to halve child poverty by 2010 - but there isn't room to do both.

If the Labour Party can't make that argument then I'm not sure what the Labour Party is for."

Stuart White, one of the pamphlet's authors, highlighted "deep disatisfaction about the current state of debate around tax" and called for a new campaigning group to take on the powerful, populist coalition - including the Daily Express, Richar and Judy, Stephen Byers, the Conservative Party and the Observer - that have so far proved so effective in winning the argument.

"In light of the government's twitchy and nervous silence, we need a new group to make the case for inheritance tax - and tax in general - in a way that politicians are unable to do."

This sentiment was echoed by Brendan Barber of the TUC:

"There is an urgent need for a much livelier debate for a much fairer taxation system and this pamphlet is an important and welcome contribution to that. Tax is not a dirty word - it recognises what binds us together and if tax is not seen as fair it is deeply corrosive to our democracy."

Barber hignlighted that the tax system needs to be transparently fair in order to maintain popular support. Tax avoidance needs to be robustly addressed - one of the problems of the current inheritance tax arrangements is that the super-rich avoid paying it, thus undermining vital political consent form the midlle classes and alienating the working class.

White explained that the pamphlet seeks to clarify the facts about inheritance and its contribution to inequality and makes a strong "moral case" in favour of the rpinciple of inheritance tax, whilst recommmending replacing the current system with a tax on capital receipts which "better reflects the moral goals of inheritance tax," said White.

"The current system means to them that already hath, more tends to be given: so we need to make the moral case for tax justice. Inheritance should not be allowed to stand as an unearned windfall."

"More fundamentally it is a matter of equal opportunity: inheritances are undermining equality."

This was a view forcefully endorsed by Martin Narey:

"We have a dreadfully unequal society and that inequality is being embedded," he said.

"We need to tell the story of inequality in this country to the 94% not paying inheritance tax."

There is dissatisfaction with the governmnent at both ends of the tax spectrum, with the uproar amongst Labour MPs over the abolishing the 10p tax rate matched by anger in the business community over changes to capital gains tax and treatment of "non-doms".

But Narey questioned "if Labour MPs got so excited about the 10p tax rate, why were they not enraged by the changes to inheritance tax?"

And Barber criticised "the business lobby and the champions of the super-rich" and warned that "special interests are receiving a level of attention deeply unhealthy in a democracy."

For The Independent's Dominic Lawson, however, the panel were missing the fundamental "emotional problem of inheritance tax."

"There are peculiar emotions involved in inheritance tax which the Left need to recognise. It is a real political problem and the idea stated in the pamphlet that it is not virtuous to give your children a leg up is not understanding the British middle class."

"You are taxing someone's dreams. Don't underestimate the strength of feeling, which is very great."

Lawson's contribution emphasised the huge challenge that progressives face in making the case for fair inheritance tax, but also recognised how timely and necessary the pamphlet is, as White declared, to "create a political strategy for creating a real debate: getting the facts across, challenging misconceptions, making the moral case.

In the US, supporters relied on statistics and self interest - and lost.

There is a lesson to be learned here - we need to make the moral case."

Narey closed by quoting an anonymous internet posting which stated "I want to help my children but I don't mind paying some tax while I do it." It is by tapping into this sentiment that the best chance of rallying people behind the principle of inheritance tax lies.

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