Economists have warned government’s inheritance tax raid on farms will cost the Treasury £1billion more than it makes – backing up fears raised by Tatton MP Esther McVey earlier this month.
According to analysis by CBI Economics, the changes could reduce economic activity by £9.4 billion and see the Treasury miss out on nearly £1.3 billion by 2030.
Ms McVey said the findings were the latest damning indictment that Labour did not understanding farming, rural issues and the wider impact it would have on businesses.
She said: “This report comes as no surprise. My farmers were clear from the beginning the devastation this policy would cause not only on farms having to be sold, in turn putting food security and jobs at risk, but the wider implication on investment.
“It is obvious that if farms know they are going to have to find huge sums of money to pay in inheritance tax, investment would be pushed to one side. People cannot spend money when they are looking at big bills.”
The report said the treasury underestimate the impact the policy would have or that more than 125,000 jobs could be lost.
Earlier this month Ms McVey spoke in a Parliamentary debate on the changes to inheritance tax and set out concerns of Tatton farmers. She also told of warnings from accountant Richard Barnett, who works with many farmers across Tatton, that the policy would not generate the amount Treasury claimed, but instead would increase numbers of people wanting farmland to the value of £1 million to avoid inheritance tax and increase land prices.
