The 2020s will go down in history as being one of the most unique yet reflective periods in history. A turning point for humanity. The onset of COVID-19 and subsequent economic catastrophe has borne the inadequacies in our systems of governance with increasing wealth inequality fueled by decades of tax cuts to the rich not trickling down, and there lies the opportunity. Government must take this opportunity to do more to move toward this newfound vision of long-term social responsibility and sustainability which the past system cannot deliver. This could come in the form of the taxation of the rich or multinational corporations to fund a plethora of socially responsible and sustainable initiatives and thus industries.
A recent major study by Hope (London School of Economics) and Limberg (King’s College, London) suggests that tax cuts to the rich has not led to increases in the promotion of job creation and/or growth in general. This may be due, in many cases, of the hoarding of wealth which is left unspent and therefore ineffective in economic growth. Consequently, government has an opportunity to levy a one-off tax on wealth whether through earnings or capital gains or introduce a long-term progressive tax system on wealth to incentivise the use of liquid assets such as cash.
Alternatively, or in parallel, the continued profit-making of major technology firms in the UK with foreign jurisdiction could be an alternative source to place a tax on corporate wealth and earnings. Many technology companies have complex multinational legal structures allowing them to export profits they make in one jurisdiction to others avoiding taxes.
It could be argued that wealth will flee the UK in the form of individuals or corporations as a consequence of such taxation, and therefore negatively impact the economy as a whole, but the UK government also has an opportunity to utilise its new position in the world outside of the EU as a means to create its own image in diplomacy and democracy. The UK government is currently pursuing an attempt to stylise the UK as a leader in green technologies and processes. Likewise, it could become a leader of social democracy and moral diplomacy moving forward.
Revenues raised from the tax on wealth would provide ample spending to incentivise the change in pace across industries toward sustainability and social responsibility. Tax incentive or subsidy schemes could be utilised to encourage growth in new job creation in these emerging ideals, coupled with improvement of STEM apprenticeships through private sector engagement and negotiation. A reversal of the fear of direct government involvement would herald a new era of government funded research and development start-ups, allowing the government to leverage its civil service and diplomatic apparatus to support them. Acting as guarantor, the UK government could extend further funding to private sector corporations of the same intentions. Socially responsible firms that champion the move away from the capitalist profit maximisation model should be rewarded and recognised by government. Public inquiries into other firms such as oil conglomerates regarding intentions moving forward would shed light on those continuing to ruin out of greed.
The UK government should lobby world governments to follow the same path to equal prosperity and green recovery, whilst disparaging unwilling participants using economic sanction and denouncement. The UK government with its newfound position in the world should champion a global wealth tax system to encourage equality amongst nations and individuals. This should be on the premise that every economy in the world has been hit hard by the COVID-19 pandemic and thus each government’s role in recovery should hold these goals of social responsibility and sustainability, whilst moving away from past primary drivers of profit maximisation, should be key to any new policy making. The UK government can share its policy intentions, including the application of a form of wealth tax as proof of concept to developed and developing economies alike. Sharing such intentions may encourage others to do the same without the fear of wealth drains. The UK government could work with partner economies on the improvement of their own strategy and policy making toward these common goals, exemplifying the titular “Global Britain”.
The opportunity to reflect, identify problems, and now act upon them is likely one of the greatest chances of systemic upheaval the UK or any other government has ever been given that may not have otherwise come. To not take such an opportunity and extract value from it would be a significant mistake especially with many economies taking repeated hits. Let us ensure the sacrifice given by the many is not without reason for us to build back better.