The Institute for Public Policy Research (IPPR) has urged Prime Minister Andy Burnham to raise taxes on wealthy pensioners to rescue the public finances, proposing to extend national insurance to older earners, including the 2 per cent NI surcharge. The call comes as the think tank warns that Britain cannot meet the fiscal challenges of the coming decades by asking people in work to pay more.
Proposals to reform the tax system
The report, authored by Oxford professor Ben Ansell, argues that a new “fiscal contract” is needed to address the rising costs of an ageing population. Alongside extending national insurance to pensioners, the recommendations include replacing council tax and stamp duty with a single proportional property tax of around 0.65 per cent.
Prof Ansell also proposes equalising capital gains tax with income tax rates, alongside an investment allowance for normal returns. He said: “Britain cannot meet the fiscal challenges of the coming decades simply by asking people in work to pay more and relying on another round of stealth taxes.”
Ageing population pressure on public finances
The professor highlighted that ageing is set to become the biggest source of pressure on public finances. He noted that the tax system has increasingly shifted responsibility towards younger workers while protecting those who have benefited most from decades of rising property and asset wealth.
“Reform is politically difficult, but avoiding it has simply given Britain an ever more complicated tax system,” he said. “We need a new fiscal contract: one that raises the revenue the country will need, shifts more of the burden from work towards wealth and property, and is honest with the public about who pays and why.”
Political reaction to the IPPR report
Sir Mel Stride, the shadow chancellor, warned that the IPPR’s proposal should sound the alarm for older voters before the Budget. He said: “When Andy Burnham’s favourite think tank is proposing huge tax increases on investment, pensioners and family homes, this should be a warning sign for what is to come at the Budget.”
He added: “Labour have already killed growth with their vast tax rises, yet Andy Burnham is refusing to rule out coming back for more.”
A Treasury spokesman responded: “The Chancellor is fully focused on his priorities: to boost business, help with the cost of living and support people in every postcode. As has always been the case, the Chancellor will set out decisions at fiscal events, rather than routinely commenting on rumour, speculation or proposals.”
