RUTH SUNDERLAND: Labour Party wages war on the rich

Hundreds of thousands of wealthy people are likely to leave the country over the next four years if Labour Chancellor of the Exchequer Rachel Reeves continues to tack on a raft of taxes to her to-do list.

In its recent Global Wealth Report, Swiss bank UBS predicts that 500,000 millionaires will leave Britain by 2028.

This may seem peripheral to most of our lives. Some will even cry “good riddance” and argue that it is willfully blind to worry about wealth taxes when there is so much hardship.

It is absolutely true that many British families are financially vulnerable, have little savings and struggle to pay household bills.

It is also true that millions of people who are by no means wealthy are paying significantly more tax as a result of a covert raid carried out by freezing thresholds and allowances.

So you can see the appeal, from Labour’s point of view, of hitting the rich. This war on the rich is not limited to the UK, or even to left-wing governments. The Conservatives, who will attack Reeves for going after the rich, have been happy to do it themselves. Jeremy Hunt tried a hard line on non-doms that Labour has taken up with enthusiasm.

In Italy, populist leader Giorgia Meloni recently doubled the flat tax rate on foreign income of wealthy new residents to €200,000, much to the alarm of those who had flocked to cities like Milan. She, like Reeves, wants to raise revenue to ease the pressure on government finances. The rich seem an easy target.

Even in Switzerland – the alpine pasture for the super-rich – there is a debate about imposing new inheritance taxes on multi-millionaires.

A prominent figure in the city told me that he is particularly concerned about measures to hit entrepreneurs with inheritance taxes, which could force heirs to sell family businesses.

A top-notch British education used to be a big draw for children, but the vengeful plan to impose VAT on private school fees is putting that at risk.

Fears about such tax cuts, he says, are already causing his firm’s clients to consider moving to places like Dubai. The emirate, which does not levy income tax on individuals, has its own problems.

But it has much to offer, beyond a generous tax regime: its raw energy and can-do spirit stand in stark contrast to an increasingly resentful and work-shy Britain. Of course, healthy tax systems should be progressive. Those who can afford it should pay more.

But this must be balanced against the reality that the footloose tycoon classes could easily move to a friendlier jurisdiction. Targeting them may not yield as much as hoped.

There are costs to wider society in squeezing the rich: some of them innovate and create jobs. Chasing such people away is detrimental to the growth agenda that Reeves claims to be pursuing. Once the principle of attacking wealth is established, the danger is that it trickles down.

It’s already happening. People on average incomes just below six figures – a school principal or a senior doctor, for example – already pay an effective tax rate of 60 percent on a portion of their income.

Focusing only on the rich has a superficial appeal, but it will not fix government finances, nor will it benefit disadvantaged and disaffected communities.

The risk is that this will punish ambitions and talent and slow down the growth that the entire country so desperately needs.