Wealth Tax: What the papers say

DISCUSSION about Nick Clegg's proposed ‘wealth tax' has filled many column inches this morning.

It would appear that battle lines are being drawn between the Tories and Lib-Dems over the deputy prime minister's call for a heavier tax burden on the rich through some temporary mechanism.

The Guardian and Telegraph report that the chancellor has reacted ‘coolly' to Clegg's latest words.

The government "mustn't drive away the wealth creators and the businesses that are going to lead our economic recovery", Osborne said during a visit to Sunderland yesterday.

Other reports cite Conservative MP Bernard Jenkin's word on BBC Radio 4's Today programme, where he said "if the politics of envy made a country rich, we'd be very rich", warning that further taxes on the wealthy would drive them abroad.

Shadow Treasury minister Chris Leslie pointed out that Clegg had voted for the government's top-rate tax reduction in the last Budget.

Some experts, including London School of Economics professor John Kay, are concerned that introducing a levy on people's wealth would be impossible to administer.

A Conservative source told the Telegraph that the tax systems were still coping with changes to cut child benefit from higher-rate taxpayers.

The FT's editorial column argues that increasing total tax revenues would be a "perhaps mortal" blow to growth. However, as part of a system of freeing the burden on employer and employee taxes, an annual tax on the wealthy could work. It wants the revenues raised to fund cuts in NI – a tax that the FT says discourages hiring.

"An annual tax on very large fortunes would scarcely hurt demand, while a lighter burden on work, or indeed income, could stimulate it," the FT said.

The Independent's editorial said the idea "should not be dismissed" as "cynical politicking". While income tax will always be avoidable, taxing assets is much harder to duck.

"Sympathy for the stereotypical widow – asset-rich, but cash poor, intent on living in her multimillion-pound pile until her dying day – can only go so far. The chancellor rejected a mansion tax at the last Budget, but it seems to have been a close thing. Perhaps the harsh reality of the reduced tax take could persuade him to change his mind," it said.