Page last updated at 16:41 GMT, Sunday, 7 September 2008 17:41 UK

Tax rich at higher rate, says TUC

Brendan Barber
Mr Barber said taxes had to rise for those earning more than £100,000

People taking home more than £100,000 a year should pay higher tax rates, the Trades Union Congress has suggested.

On the eve of its conference in Brighton, the TUC said the "super-rich" were better off in real terms than their Victorian era counterparts.

The £27.7bn fortune of steel magnate Lakshmi Mittal was said to be double his nearest 19th Century equivalent.

General secretary Brendan Barber said extreme wealth was "socially divisive and morally objectionable".

The TUC says higher tax rates should be imposed on earnings between £100,000-£150,000 and over £200,000.

'Ordinary people'

Limiting tax relief and tax avoidance measures open to the well-off could raise £5bn, Mr Barber said.

He told a briefing ahead of the conference that ministers "should show that they are on the side of ordinary people".

Mr Barber added that "the government should go further to cut the tax bills of ordinary families".

This could include income tax cuts or VAT reductions, including for energy bills, he said.

A TUC study - Do the super rich matter? - has been published to coincide with the organisation's annual congress in Brighton.

It compared the fortunes of Britain's wealthiest people with the largest estates left in wills in each decade since the 1850s.

The super-rich have not created much in the way of extra wealth - they have mostly taken it from the rest of us. It's Robin Hood in reverse
Brendan Barber, TUC

It found that, in real terms, the biggest until the 2000s was the £36.5m left by Sir John Ellerman in 1933 - worth around £12bn now.

Next was the £14m estate of the Duke of Westminster in 1899 - equivalent to £10.6bn today.

The report says Russian oil magnate and Chelsea Football Club owner Roman Abramovich is currently Britain's second-richest man, worth £11.7bn, followed by the Duke of Westminster on £7bn, Sri and Gopi Hinduja on £6.2bn and Alisher Usmanov on £5.7bn.

The TUC report suggests it was necessary to be worth £50m to be among the UK's 200 wealthiest people in 1990, but today more than £400m is needed.

'Worthless'

It argues that "the main source of the new wealth has been the growing power of 'financialisation'.

"The most obvious example of this is the huge profits made from selling sub-prime mortgages wrapped up in exotic financial instruments.

"These turned out to be near worthless and led, not just to many losing their homes, but to the credit crunch which is now causing world economic slowdown."

Mr Barber said: "The evidence assembled here is conclusive proof that the growth of the super-rich is not just socially divisive and morally objectionable, but deeply damaging for the rest of the economy.

"The super-rich have not created much in the way of extra wealth - they have mostly taken it from the rest of us. It's Robin Hood in reverse.

"Those suffering from the impact of the credit crunch should know that it was caused by the super-rich taking risks with other people's money, pocketing the profits and passing on the inevitable losses."

The TUC congress runs from Monday until Thursday.


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