A think tank suggests that tightening up some existing wealth taxes and subsidies could help the Government save almost £7 billion a year by 2022/23.
Scrapping the lifetime and help-to-buy ISAs, reforming or replacing council tax, and clamping down on inheritance tax loopholes are among the suggestions made by the Resolution Foundation.
Other recommendations include making pensions tax relief more progressive and limiting entrepreneurs’ relief.
It suggests abolishing the two ISAs would save up to £900 million a year, while increasing the top council tax bands in England would generate around £1.4bn a year.
On top of that, it argues that capping the tax-free pensions allowance at £40,000 a year would raise around £2bn, and £1.6bn a year would be fetched by returning the lifetime entrepreneurs’ relief limit to £1m.
Entrepreneurs’ relief currently charges a reduced capital gains tax rate of 10% on disposals made by SME owners up to the lifetime limit of £10m, giving a potential tax saving of up to £1m.
The report predicts that as the UK population ages, the cost of public services will rise by £36bn a year by 2030, and £83bn by 2040.
The Resolution Foundation acknowledged that changing wealth taxes would be “politically difficult” – but said the funds raised would go some way to cover this growing cost.
Torsten Bell, director of the Resolution Foundation, said:
“The good news is that relatively large sums can be raised simply by tightening up our existing wealth taxes and subsidies.
“That is how we protect our public services without placing all the burden of taxation on hard-earned income from work.”
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