The left seems eternally surprised that the public dislike inheritance tax. “But most people don’t even pay it,” is the endless refrain – a version of it was uttered most recently by Polly Toynbee on yesterday’s Marr show.
In their continued attachment to this argument, the critics of inheritance tax miss the point. People don’t have to pay it themselves to find it distasteful to set the revenue on the newly bereaved, or to resent multiple taxation of the same money, or to oppose the levying of a tax on the natural, laudable instinct to help one’s own family when one dies. Most estates may not be subject to inheritance tax, but people are not as selfish as the Toynbees and Corbyns seem to imagine, they can sympathise with the plight of others – that’s why the left keeps losing on the topic.
The issue has played a political roll far greater than its fiscal clout. Famously, Osborne used it to head off the election that never was, and it featured in the 2010 and 2015 manifestoes (to some effect, despite the continued failure of the Government to fully implement its pledges).
Now, after a miserable week for the Prime Minister, Labour have chosen to move the Panama story on from tax havens, a battlefield where they perhaps have the upper hand, to inheritance, a battlefield strewn with the wreckage of decades of Labour defeats. That they have done so is yet more proof of Corbyn’s poor political judgement. Combine this choice of topic with the Labour leader’s seeming inability to hit even open goals and Cameron’s ability (or troubling preference) to fight best when under pressure, and it looks like another opportunity thrown away by the Opposition.
The idea of seizing people’s savings and homes when they die might appeal to hard left ideologues like Corbyn and McDonnell, but to most voters it looks like opportunistic big government at its least attractive, snaffling money when people are at their most vulnerable by rebranding death as a transaction. If you choose to leave some money or assets to your children rather than spending it all on yourself in retirement, you should be congratulated for your selflessness and sense of family responsibility – not hammered with tax. If you pay tax for earning, then pay tax for getting interest on your savings, then pay tax for buying and maintaining your home, you shouldn’t have to pay tax again for the simple act of dying.
Leaving an inheritance is a positive choice, which should be encouraged and facilitated, not punished. It is clearly good for our society that parents take an interest in helping their offspring to secure their future. It means more people have the safety net of savings, rather than relying on the safety net of the taxpayer when things go wrong or times are bad.
Opponents complain of inheritance entrenching inequality as though encouraging people to splurge all their money in their final years rather than leave it to their family would produce a better social outcome. It wouldn’t, obviously. What they want, as ever, is the “equality” of everyone having nothing, not because it would help anyone but because it would satisfy their envy.
This deeply unpleasant attitude can also be seen in the left’s attitude to the details of inheritance tax law. Yesterday, Corbyn suggested a future Labour Government would review the seven-year rule by which gifts given by a person are tax exempt as long as they live for seven years after they were given. Cutting back or scrapping that principle would lead to injustice upon injustice – it is in place to try to reduce the impact of unforeseen deaths, and removing it would add further pressures and misery onto the bereaved. It’s bad enough that we tax inheritance at all, without empowering the tax man to turn up on the doorstep of those who have lost a loved one demanding to root through the last seven years of their bank statements and their personal possessions.
The Conservative Party is right to reject this poisonous and unpopular position. Instead we should seek a society where as many people as possible have a home and savings to pass on to their children in the first place, and then a system in which they are as free as possible to do so. Given the fact that the deficit still exists, we cannot expect a tax which still raises £3.8 billion to be abolished overnight, and there are other, even worse, taxes which should be higher on the Government’s priority list once the books are balanced. But the eventual goal should be clear – it is wrong to levy a tax on a natural, laudable action, and we should seek to abolish it when the opportunity comes.