“Let us never forget this fundamental truth… there is no such thing as public money; there is only taxpayers’ money.” So said Margaret Thatcher back in 1983. The point she was making at the time was that if the government wants or needs more money it has only one place to go for it. “It is no good thinking someone else will pay – that someone else is you.”*
Move forward 30 years and an awful lot of someone elses – all of us at Moneyweek very much included – are beginning to get very nervous indeed.
We’ve told you over and over again that we expect a good part of the fiscal end game to involve the confiscation of your wealth. It will be done slowly and sneakily (keeping interest rates below inflation, putting levies on your energy bills to cover green subsidies etc) most of the time. But that won’t be the end of it.
There may be capital controls. There will be new taxes of one kind or another on those perceived to be wealthy (sharp rises in NI for higher rate taxpayers and a mansion tax perhaps). There will be cuts to the tax benefits of pensions (the slashing of the 25% you can take in a lump sum on retirement being the obvious next step). There may be changes to the Isa regime (note the floating of the idea of a £100,000 cap on savings).
And we have also wondered in the past if there is likely to be a one-off levy on pension and Isa assets or even just wealth in general at some point. What could be easier in the minds of authorities than to shave a few percent of everyone’s wealth in the name of patriotism? It turns out that, if you consider the IMF to be an authority, the answer is nothing.
October’s Fiscal Monitor notes that “persistently high debt ratios in advanced economies… cast clouds on the global fiscal landscape”, that dealing with this must remain “top of the policy agenda”, but that “the scope to raise more revenue is limited in many advanced economies… where tax ratios are already high.”
The paper then talks about various ways of dealing with the problem before noting that “taxes on wealth… offer significant revenue potential”, and mentioning the possibility of a “one-off capital levy”. In the euro area, according to the IMF, you can reduce debt levels to where they were in 2007 with a one-off levy on all households with “positive net wealth”.
So, now you know. The IMF isn’t (I don’t think) actually recommending this (yet). But the idea is certainly out there. And – assuming you have positive net wealth – that should give you something pretty nasty to worry about.
* Thanks to Andrew Hamilton for reminding me of this quote.