Former transport secretary Stephen Byers has enlivened a quiet week by calling for the abolition of inheritance tax. His article in The Sunday Telegraph lambasted the “tax on death”, which was introduced in 1694, as “a penalty on hard work, thrift and enterprise”.
Some commentators have come down on him like a ton of bricks. The Evening Standard’s Peter Oborne calls Byers “the rich kids’ new best friend” and says that his proposal was a licence for “Notting Hill trustafarians” to sit around doing nothing. Polly Toynbee in The Guardian took a similar view. Byers is attempting to bury “one of the few instruments that spreads wealth around”, she says. In any case, it’s not as though that many people pay it; it affected 37,000 estates last year, out of 600,000 deaths.
But as The Sunday Telegraph points out, in 1996-1997 just 15,000 people paid the tax. And the IHT threshold is only £285,000, above which the rate is 40% – when the average house costs nearly £200,000.
So the tax increasingly falls on the middle classes; “the days when it could be said to penalise the very wealthy are long gone”. With the value bequeathed in wills expected to double by 2020, thanks to the property boom, the number of people hit will rocket. What’s more, the super-rich are in a position either to avoid IHT completely or temper its impact by hiring tax lawyers and accountants.
Inheritance tax is “a thief at the side of the grave” and should be abolished forthwith, says Matthew D’Ancona on Spectator.co.uk. Of course, “a snowflake has a better chance in hell” than Byers’s proposal under a Labour government. So why make it? Byers was “firing a shot” on behalf of the party’s Blairite faction, which is concerned that Brown’s lack of sympathy for Middle England could eventually lead to “electoral oblivion”.