By Jack Parbrook
Death and Taxes: British Farmers Protest Inheritance Tax Changes
British farmers took to the streets of London in November protesting inheritance tax changes in the Labour government’s first budget. Chancellor Rachel Reeves announced amendments to agricultural property relief, meaning that inheritance tax of 20% would have to be paid on the value of inherited farms over £1 million (N.B., certain reliefs available may mean a lower tax rate would have to be paid on the inheritance); prior to the introduction of these rules, agricultural property was exempt from inheritance tax, with some wealthy people purchasing farms in attempt to avoid inheritance tax and concede only to one of life’s certainties.
The principal concern of farmers is that the tax will force their descendants to sell part or all of their farm in order to pay the inheritance tax bill, since although the land and the equipment may be very valuable, the farms themselves only generate modest cash flows. The government sought to assure the public that a very small number of farms will be affected by the tax, but the National Farmers’ Union claims over 60% of UK farms will fall within its scope. Nevertheless, it appears Reeves intends to plough ahead with the changes.
Red Light: Germany’s Coalition Government Breaks Down
After the 2021 federal election, three parties formed the ‘traffic-light’ coalition to govern Germany: The Free Democrats (FDP), the Social Democrats (SDP), and the Greens. The Chancellor of Germany the SDP’s Olaf Scholz agreed to hold a confidence vote in his leadership in December. If, as is expected, he loses, a snap election could occur February 2025.
The coalition collapsed after Scholz fired finance minister Christian Lindner of the FDP due to a dispute over Germany’s budget and how to fund a €9 billion hole in spending plans. Both the SDP and the Greens wanted to remove ‘Germany’s debt brake’, which limits how much the country can borrow, but Lindner refused to sanction this.
The Christian Democratic Union its sister party the Christian Social Union (the CDU and CSU respectively) are the favourites to win the election, which would allow Friedrich Merz to become chancellor. The FDP are currently polling at less than 5% and if their fortunes do not improve they will not have any representation in the Bundestag following the election. Scarcely improving matters for them is the discovery of evidence of an FDP plan in which they quit the coalition to bring down the government.
In Brief
Donald Trump will return to the Oval Office in January 2025 after winning the US election with 312 of the country’s 538 electoral college votes. There are concerns that Trump, with his promises to levy high tariffs on imports to the USA, could spark a costly trade war.
On the 29th of November, British MPs voted in favour of a bill on assisted dying. The bill will face more scrutiny before it reaches to the statute book, but should it make it there in its current form, terminally ill patients with fewer than six months to live will be able to terminate their lives subject to the approval of two doctors and a High Court judge.
The views expressed in this article are the author’s own, and may not reflect the opinions of the St Andrews Economist
Image Source: https://commons.wikimedia.org/wiki/File:Farmers%27_Protests_in_London,_Wed_20th_November_2024.jpg
