YOU report on the paper by the Institute for Public Policy Research calling for additional taxation to raise an extra £90 billion for the UK economy over the next five years largely by treating capital gains tax the same as income tax, and thus capture for HMRC many of the assets of wealthy people who currently manage to avoid taxation (Fairer tax system could raise an extra £90bn, September 9).

This proposal is just another example of adding another layer to an already ridiculously complex taxation system. For every loophole closed the tax lawyers and accountants will find a way round to avoid the tax. The report starts from the wrong premise of “how do we raise more tax?” instead of “how do we raise more money for public services?”

READ MORE: Fairer tax system could raise an extra £90bn for the UK economy

It fails to look at the basic cause of avoidance, which is taxation on moveable assets. If assets are moveable, taxation on them can be avoided in thousands of different ways.

Instead, raise all public funding from immoveable or heritable assets which can’t be taken offshore.

A model of Annual Ground Rent charged per square metre on all space (land and the buildings on it) will raise far more for public funds, cost a fraction to collect, can’t be avoided and radically improves our environment, as space becomes a liability if not used.

Public as well as privately owned space would pay, so councils couldn’t keep land for generations and do nothing with it.

Existing devolved powers allow the Scottish Government to introduce such a model now without any involvement from HMRC.

Funds raised could provide a really significant Citizen’s Income for everyone and drive the wedge between us and the rest of the the UK, making independence financially irresistible.

Graeme McCormick
Arden, by Loch Lomond

THE suggestion from the Institute for Public Policy Research anent taxing “profit from selling non-residential assets” seems like another ill-thought-out blanket idea, with unforeseen ramifications and unintended consequences. It implies that dividends and accrued interest are an indicator of wealth acquired without effort. On the contrary, I believe there are a number of scenarios that could fall under the heading of such “profits” that are far removed from the machinations of wealth.

Consider one such of which I personally am aware. Someone from a very impoverished background left school and entered the workplace with the determination to save enough, however long it took, to own their own home, to provide a security in old age that none of the previous family members had enjoyed. This took more than 50 years and was finally achieved by dint of saving a tiny amount from every wage during an entire working life, and whenever possible buying a few shares. Left untouched, with dividends added as new shares, these were then sold on retirement for just enough to buy a small flat and provide the secure home dreamt of for so long. Taxing the “unearned” income added to these savings from a lifetime of wages would have seen the ambition fail. Is this the kind of “income from wealth” that the group envisages being taxed?

Another case I know of is similar. Here the ambition was to have enough put by to ensure that in old age independence could be maintained without depending on state assistance, even if illness and disability struck. The process of saving involved many years of scrimping and making sacrifices to free small amounts to invest where some value might be added through time – doing without holidays, meals and evenings out, no impulse buying, spending only on necessities and also paying little by little into a pension fund for many years.

At retirement, the very moderate lump sum from that last was also invested to ensure independence and security for as long as possible. Should the growth in these savings also be taxed as normal income, when the original money put in was from what remained of income after normal tax?

Where someone has true wealth – ie well above the average of even the better-off in society, or acquired by inheritance without any personal effort – one might perhaps regard the regular buying and selling of investments as simply a money-making process to vastly increase already considerable wealth, and a form of business, and therefore a suitable target for tax. The IPPR proposal, however, would see even things like parental savings in a child’s name, intended to help fund further or higher education, or even a child’s own saving of pocket and birthday money, having the interest taxed at the same rate as work income.

Would this not make it seem pointless even to consider saving at all? Would it not suggest that one would be better to enjoy life spending every penny as it comes in and leave it to the state to provide when the money runs out? Would it not be better to tax earned income and encourage the saving of what is left after that, with the accrued interest being the reward for doing the right thing and avoiding, if possible, becoming a burden on the state? With the prospective threat to pensions and pension age in the future, this would seem a much more logical way forward.

P Davidson