DEBATE: Is the UK going to require higher taxes in the future?
Whoever wins this election, is the UK going to require higher taxes in the future?
Adam Corlett, senior economic analyst at the Resolution Foundation and author of its report “The shifting shape of UK tax”, says YES.
Tax is set to be a major battleground at the election. Labour has been upfront about its plans for tax rises, while the Conservatives have hinted at big tax cuts.
But despite these differences in their stated policies, the reality is that the next government, and the ones after that, will need to raise taxes.
Why? Because Britain’s ageing society will mean that the annual cost of providing existing health services, care, and social security provision alone — never mind any new promises — will rise by £36bn by the end of the decade.
That can’t be funded through extra borrowing: the parties’ new fiscal rules preclude it. And no party is campaigning on a platform of slashing the state pension and rationing healthcare.
So funding our future services will have to come from tax rises. And that needn’t be too taxing — after all, the tax rate for an average worker have been falling for 40 years, while wealth is certainly undertaxed. So, the real question we should be asking is not whether taxes will rise, but which ones.
Sam Packer, media campaign manager at the TaxPayers’ Alliance, says NO.
Britain needs lower taxes, not higher. The tax burden is already the highest it’s been for 50 years, and the poorest 10 per cent of households pay half their income in tax.
It is plainly wrong to say that taxes need to rise to fund higher public spending. Britain has had consistent real terms spending increases for decades, up to the present almost trillion-pound government budget.
The idea that there is no fat to trim from bloated government budgets ignores the evidence provided by think tanks, watchdogs and journalists on a daily basis. What the country really can’t afford is to continue stymying growth and undermining confidence in the system by squeezing the public until the pips squeak.
Finally, on a practical level, raising taxes will be incredibly difficult to justify. Our polling shows a widespread desire for cuts to income, personal and business taxes, including among lower-income voters. The public understands that higher taxes on business result in higher bills — and higher prices for all.
Main image credit: Getty