Tuesday, 22 April 2008 19:00

ImageBritish Universal Inheritance (BUI) is a popular capitalist, meritocratic, broadly self-financing Asset Welfare State proposal suitable for a genuine 'Opportunity Society' (Conservative Party) or genuine 'Opportunity for All' (New Labour). It is already - since 2005 - party policy of the original and continuing Liberal Party (not the EU-fanatic LibDems).

Reform Inheritance Tax (IHT) into an exemption-free flat-rate 10 % Donor Tax (DT) on the luxury expenditure of all giving and bequeathing of capital. Make this tax deductible from a new progressive Lifetime Unearned Capital Tax (LUCT), starting at 10%, on capital receipts that beneficiaries have done nothing themselves to create, earn, make or save. Use the proceeds to provide every British-born British citizen at 25 with a BUI of, say, £9,000 tax- free, being 10 % of the roughly £90,000 average wealth of every adult and child in the country. Those older than 25 at the time the proposal is introduced would be able to reclaim on capital given or bequeathed to them up to £9,000 of DT already paid by donors.

So inter-generational transfers leading to lifetime receipts of unearned capital up to £90,000 would be net tax-free (£9,000 DT paid by donors less DT reclaimed or BUI received by beneficiaries). Inter-generational transfers leading to lifetime receipts of unearned capital above £90,000 would be subject to the progressive LUCT (less DT already paid by donors) on balances in excess of that figure. Intra-generational giving between partners, spouses and cohabiting siblings would be tax-free, with the 10 % tax already paid by donors being reclaimed by beneficiaries.

The parameters of progressive rates and amounts of this broadly self-financing proposal could be chosen to cover the tax take of the currently exemption-ridden - because of its overly high starting rate - IHT. The average wealth of every adult and child in the UK was £85,000 at the end of 2002, according to the Office for National Statistics, as reported by The Times. No more recent figure appears to have been published.

Such an Asset Welfare State measure would help in each new generation to encourage home ownership, entrepreneurial activity and a sense of British progressive national community and identity. It would help to reduce alienation, crime and policing costs, financial and social exclusion, inequality of opportunity, wealth and income and so the need for and cost of the Income Welfare State.

Yours sincerely

Director, OPPORTUNITY - The Campaign for British Universal Inheritance
PO Box 1148 Oxford OX44 7AT
01865 400421 07711 873331

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