Rishi Sunak

The commission is a group comprised of tax experts and economists brought together by the London School of Economics and Warwick University to examine a levy on assets, said that targeting the UK’s richest would be the fairest and most efficient way to increase the taxes needed to repair the damage to Britain’s public finances and tackle inequality.

The commission, which has drawn attention from the Commons treasury committee and the former head of the civil service, Sir Gus O’Donnell, said its proposals would be preferable to a broad-based tax raise.

It urged that a wealth tax could raise £260bn over five years if the threshold was set at £1m per household, with a levy of 1% payable on the value of assets above that level.

the tax would be equivalent to raising VAT on goods and services by 6p, or adding 9p to the basic rate of income tax for the same period, the commission said.

The tax would apply to a person’s total wealth, including their home, other properties, pensions, business and financial wealth. Debts such as mortgages would be deducted. To sidestep concerns that the tax could hurt people who are “asset rich but cash poor”, the commission said payment of the one-off levy could be spread out over five years.

Arun Advani, assistant professor at the University of Warwick, one of three commissioners behind the study, said: “We’re often told that the only way to raise serious tax revenue is from income tax, national insurance or VAT. This simply isn’t the case, so it is a political choice where to get the money from when there are tax rises.”

The report comes as Chancellor Rishi Sunak explores options for increasing taxes from as early as next year in response to record government borrowing during COVID-19.

The UK budget deficit is set to hit almost £400bn this year, as the UK Government funnels billions into its pandemic response and tax receipts plunge, The Guardian reports.

Although the chancellor has been urged to delay tax rises or spending cuts, he used last month’s spending review to freeze public-sector pay and cut overseas aid. Rishi Sunak has previously said there would never be an appropriate time for a wealth tax.