People earning more than £19,500 a year would need to pay more tax if we followed a £40bn plan to boost public money after the coronavirus pandemic proposed by a think tank.
The Resolution Foundation argued that a range of tax changes by the mid 2020s could help to prevent the return of austerity measures and tackle government borrowing.
Official figures show record peacetime borrowing has taken place this year – £208bn in the first six months of the financial year.
That’s £175bn up from the same period in 2019.
The think tank proposes a “health and social care levy” of 4% on all incomes over £12,500, reports Sky News.
It adds this would be offset by a 3% cut on employee national insurance and getting rid of Class 2 National Insurance contributions for self-employed Brits.
Would you be willing to pay more tax to offset the cost of the crisis? Let us know in the comments…
Resolution Foundation argued that the change would not penalise those hit worst by the crisis restrictions – the low-paid and self-employed.
It also said that it would boost the social care system.
The research claimed that the levy would raise £17bn annually and the think tank suggested £6bn of that should go to social care situations, whose failures were exposed by the crisis.
The study added: “These offsets would leave employees earning £19,500 and below better off as well as self-employed workers earning less than £17,000.”
The median UK salary in 2020 was £30,420 per year.
Daily Star's newsletter brings you the biggest and best stories – sign up today
Other possible measures included a “pandemic profit levy”.
This would be a windfall tax on firms which benefited from the crisis – such as supermarkets and contractors working on pandemic projects for the government.
An increase in corporation tax from 19% to 22% could be considered which could raise £10bn, said the foundation.
And, it argued for wealth tax rises like restrictions on capital gains and inheritance tax reliefs which would raise £9bn.
Resolution Foundation published its case just after a government commissioned report advised a change to capital gains tax which would target tax avoidance and second home owners.
The Office for Tax Simplification recommended new rates which could raise up to £14bn annually.
It is thought that Chancellor Rishi Sunak is keen to balance out Covid-19 spending.
Resolution Foundation research director James Smith said: “The chancellor should combine tried and tested revenue raisers with major reform of wealth taxation and a new health and social care levy.
"This would ensure that post-Covid tax rises reflect the very uneven nature of this crisis, but also play a part in building a better country after it."
Source: Read Full Article