Reeves to introduce wealth tax?

Of course. Why not bring back the guillotine as well while we are at it. France discovered the painful reality when their wealth tax generated negligible revenue while driving an estimated 42,000 millionaires abroad, taking their spending, employment creation, and future tax contributions with them. The estimated £600 million setup cost alone exceeds the annual yield of multiple existing taxes, suggesting this policy appeals more to political rhetoric than economic arithmetic. Moreover, the administrative nightmare in Labour's "tax the rich" policy would finally make the Tories' IR35 look like a model of clarity. Come to think of it - valuing illiquid assets, family businesses, and complex investment structures annually would create a compliance industry that would benefit accountants more than the Treasury itself. Finally something young Rachel from admin would be proud of.

So I've only really got a layperson's understanding of economics but I'll make the comparison to monopolies. There are commissions in place to stop organisations from operating in a way that is unfair, real simple concept at work there, fairness. In the UK and most of the world, when it comes to personal wealth there are no such safeguards in place. If they're able to find a way an individual is free to accumulate wealth to the point where 8 people own more than 50% of the global population. To me that just seems completely unfair.
As for wealth shifting overseas, I struggle to see what difference it would make to the average working person in Britain if the mega rich upped and left. They don't share their personal wealth with the rest of us and if they are investing in successful business ventures they're scalping the profits to add to their personal pots instead of raising the wages their employees receive.

A wealth tax sounds simple but in practice it risks doing more harm than good. The ultra-wealthy will restructure or relocate, while the genuinely successful professionals and business owners who already pay a large share of tax end up caught in the crossfire. The cost of administering and enforcing it could outweigh the revenue it raises. If the government wants fairness, it should focus on closing loopholes and reforming outdated property and capital gains taxes rather than creating another complex levy that drives capital overseas.

If the Chancellor were to flirt with a UK wealth tax, it would be a high-risk, low-yield move that damages growth. The Wealth Tax Commission’s own work concluded that an annual wealth tax is a “non-starter” in the UK because it’s complex to administer and invites costly behavioural responses. Even their most favourable modelling (one-off design, £2m threshold) still assumed material avoidance and heavy administrative drag. In short: we’d spend a lot to collect not-that-much, while scaring off investment.

A UK wealth or mansion tax is the wrong tool at the wrong time. It risks exporting capital, entrenching complexity and raising less than advertised - while we leave billions on the table through fraud/error and policy inefficiencies. If we’re serious about growth, prioritise productivity reforms, streamline existing taxes (especially transaction taxes), and cut wastage before reaching for new, distortionary levies. That’s how you fund public services and keep Britain investable.

One of the biggest challenges with a wealth tax is how individuals actually fund it when much of their wealth is tied up in illiquid assets.

Elon Musk is a prime example. His net worth exceeds £300bn, most is held in Tesla shares, meaning he’d need to sell stock to pay the tax.

For private business owners, this is even more complex: there’s often no ready market for their shares, and selling to competitors is rarely desirable. Governments may therefore need to offer exemptions or deferrals for business assets, but that risks significantly reducing the revenue such a tax could raise.

Business valuations also introduce major uncertainty. Unlike property, valuing a private company is as much art as science. HMRC could challenge these assessments, adding enormous cost and complexity for taxpayers.

When UK Chancellor and Gov policy makers introduce proposed changes we rarely see their economic impact analysis underpinning their changes. Let's take the example of the 20% vat wealth tax on parents paying for private education
UK Gov stats show

87% of total 550000 UK private school students are day school not boarders.

Each pay average £17000 pa fees (boarders pay avge £36000 pa)

Thus each day school student 20% vat income = £3400 pa

and each boarder student 20% vat income = £7200 pa

BUT Each UK state school pupil costs taxpayers £8000 pa

Thus almost every transfer from private to state school costs taxpayers more than the vat reclaimed

If every private day school student (478000) transfers to state and each transfer costs taxpayers £4600 total annual tax loss = £2.1 Billion pa

Yet UK Gov claims taxpayers will gain £1.8 Billion by 2029. Can someone please help Rachel in accounts?