RUTH SUNDERLAND: Labour waging war on the wealthy (2024)

Hundreds of thousands of wealthy individuals are likely to leave the country in the next four years if Labour chancellor Rachel Reeves forges ahead with the barrage of taxes on her 'to do' list.

In its recent Global Wealth Report, Swiss bank UBS predicts 500,000 millionaires will quit Britain by 2028.

This might seem peripheral to most of our lives. Some will even cry 'good riddance' and argue it is wilfully blind to worry about wealth taxes when there is so much hardship.

It is absolutely true that too many British families are in a financially fragile state with very little savings and struggling with household bills.

It is also true that millions of decidedly non-wealthy people are paying significantly more in tax due to a stealth raid, effected by freezing thresholds and allowances.

So one can see the appeal, from Labour's point of view, of hitting the rich. This war on the wealthy is not confined to the UK, nor even to Left-leaning governments. The Conservatives, who will attack Reeves for going after the rich, were not above doing it themselves. Jeremy Hunt was attempting a clampdown on non-doms that has been picked up with gusto by Labour.

In Italy, populist leader Giorgia Meloni recently doubled the flat rate of tax on the foreign income of rich new residents to €200,000, much to the alarm of those who had been flocking to cities such as Milan. She, like Reeves, wants to raise revenues to ease the pressure on public finances. The wealthy look like sitting ducks.

Even in Switzerland – that alpine playground for the super-rich – there is a debate over slapping multi-millionaires with new inheritance taxes.

One leading figure in the City told me he is particularly concerned about moves to hit entrepreneurs with inheritance levies that could force heirs to sell family firms.

A top-flight British education for the kids used to be a big attraction, but the vindictive plan to impose VAT on private school fees will jeopardise that.

Fears about such tax grabs, he says, are already prompting clients at his firm to consider moving to places such as Dubai. The emirate, which does not levy income tax on individuals, is not without issues of its own.

But it has plenty to offer apart from a generous fiscal regime: its raw energy and can-do spirit are in stark contrast to an increasingly resentful and work-shy UK. Of course, healthy tax systems should be progressive. Those who can afford it should pay more.

But this must be balanced against the reality that the footloose tycoon classes can easily move to a more friendly jurisdiction. Targeting them may not raise as much as hoped.

There are costs to wider society of squeezing the rich: some of them innovate and create jobs. Driving such people away is inimical to the growth agenda Reeves claims to pursue. Once the principle of attacking wealth has been established, the danger is it percolates downwards.

It is already happening. Moderately well-off people whose earnings just nudge into the low six figures – a head teacher or senior doctor, say – already pay an effective tax rate of 60 per cent on part of their income.

Fixating on the wealthy has superficial appeal, but it will not help to fix the public finances, nor will it do anything for deprived and disaffected communities.

What it risks doing is to punish aspiration and talent, putting a brake on the growth the whole country so badly needs.