Azara Blog: Stephen Byers wants inheritance tax to be scrapped

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Date published: 2006/08/20

The BBC says:

Former cabinet minister Stephen Byers has called for inheritance tax to be scrapped, calling it "a penalty on hard work, thrift and enterprise".

He told the Sunday Telegraph abolishing the tax would show middle class Labour voters they had not been forgotten.
..
But a Treasury spokesperson said: "Inheritance tax is a fair and necessary means of raising revenue for public services, and only affects the top 6% of all estates.

"Anyone who wants to abolish it needs to explain exactly how they plan to fund the £3.6bn cost - the equivalent to more than 1p on income tax, or 18p on petrol duty, and almost double what we are spending this year on counter-terrorism and security."
...
Inheritance tax affects estates which are valued at more than £285,000 - but the government intends to further increase the threshold to £325,000 by 2010.

The number of people who have been forced to pay inheritance tax has more than doubled since 1997, leading to charges that the government has used it as a stealth tax.

Inheritance tax should be abolished first and foremost because it is unfair. Spouses and homosexual civil partners pay no inheritance tax, but everybody else does. Why should these two groups of people be exempt? Of course the claim is that if one spouse (or civil partner) dies then it would be dreadful if the other was forced to sell the family house as a result. But there are plenty of other people in exactly the same circumstance, who are not exempt. Unless the government is willing to make the tax fair, it should be abolished.

And the claim by the Treasury that only 6% of estates are affected is disingenous (as usual). They know full well that that number will rocket in the coming decades, which is Byers' real point. And the Treasury is taking the piss when they point out the comparisons between inheritance tax and "what we are spending this year on counter-terrorism and security". If it was not for (the illegal and) extremely expensive war in Iraq (expensive both directly on location and indirectly through the required increase in counter-terrorism and security in the UK), the Treasury would be in a lot better shape to afford to reduce all sorts of stealth taxes.

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