Green Party leader Natalie Bennett had what she called an “absolutely excruciating” interview with LBC Radio this morning.
She says she had a “mind blank” on some of the facts and figures underlying some of the party’s key policies.
Can FactCheck shed any light in what the Greens are actually proposing to do?
The Greens want to tax the assets of the wealthiest 1 per cent of Brits. That’s people who have more than £3m in property, pension rights, belongings and financial assets.
They say they want to tax this wealth at 1 to 2 per cent, raising approximately £21bn to £43bn a year.
The first problem is the numbers. The Greens say the top 1 per cent own £2.1tn. But that is almost double what the latest Office for National Statistics (ONS) estimates suggest.
The Greens have inflated the number by generously estimating that total private household wealth will rise to £12tn in 2015. And they use HMRC income distribution figures to suggest that the wealthiest 1 per cent own 18 per cent of total wealth.
That looks wonky to us – we’re confusing wealth and income here, and there are ONS figures available that actually suggest the top 1 per cent only earn 12.5 per cent of all wealth.
Since total current wealth is estimated at £9.5tn, the assets of the top 1 per cent would be in the region of £1.2tn.
ONS figures probably aren’t very accurate at the very top of the range because the super-rich are less keen to declare all their assets. And that is precisely why many economists think a tax on total wealth would be a bad idea.
The Institute for Public Policy Research did some modelling a couple of years ago and they thought that a net wealth tax would only bring in about £6.9bn, assuming people didn’t figure out how to successfully dodge it.
Their model isn’t a perfect fit with the Green idea, because it doesn’t include pensions. But it assumes that you tax everyone with assets over £500,000 – a much bigger group than people worth more than £3m.
The Institute for Fiscal Studies says a tax on all wealth is “costly to administer, might raise little revenue, and could operate unfairly and inefficiently.
“It is less likely to work well in the current environment where capital is very mobile. Most OECD countries have abolished wealth taxes.”
Some advanced economies do have wealth taxes, including France, Iceland, Spain, Norway and Switzerland. But there is a general worldwide decline in such schemes.
In France the wealth tax kicks in when you own assets worth at least 1.3m euros (£950,000), and it raised 4.4bn euros (£3.2bn) in 2013.
Arguably one of the most radical policy suggestions on the Green party website, this policy would see the state paying every citizen a small flat weekly cash allowance, regardless of their income or employment status.
It’s not a hardship benefit: you would get the money even if you have no intention of looking for a job.
It has been widely reported that the payment would cost £280bn a year, but the numbers aren’t quite as bonkers as they look, as fans of this idea would scrap most of the benefits system and collect more tax to pay for it.
One of the leading proponents of citizen’s income, Dr Malcolm Torry – whose work appears to have greatly influenced Green party thinking – produced some costings that showed how the payment could be brought in on a cost-neutral basis.
Unfortunately for the Greens, he later changed his mind, saying: “Major household losses, particularly amongst households with the lowest disposable incomes, would clearly make the scheme impossible to implement.”
Dr Torry has come up with some alternatives, but they include keeping most means-tested benefits in place and a cost to the taxpayer of £24bn.
The economic difficulties of making the citizen’s income work may be why the Greens appear to have quietly kicked this idea into the long grass.
A press officer told us today the idea is an “aspiration” rather than a fully costed policy and the party will not be pushing for a Citizen’s Income if they get into government in May.