Tax older generation more to boost the public purse, Left-wingers urge Labour
The Left-leaning Institute for Public Policy Research (IPPR) has urged the Government to shift more of the tax burden from younger workers onto older, wealthier generations, arguing the current system unfairly penalises work and youth. The think-tank's recommendations are likely to influence Chancellor John Healey as he prepares his first Budget in October, amid mounting fiscal pressure and speculation about tax rises, though the proposals could unsettle those who have spent years building up homes and savings.
The report proposes replacing council tax and stamp duty with a proportional property tax of 0.65 per cent annually, raising capital gains tax to match income tax rates, and extending national insurance to employees working beyond state pension age. It highlights a stark disparity whereby pensioners earning £45,000 to £105,000 pay tax rates of 20 to 60 per cent, compared with 37 to 71 per cent for younger graduates repaying student loans. The IPPR warns that Britain's ageing population, projected to see the over-65 share rise from 18 per cent in 2024 to 27 per cent in 2075, will drive huge increases in health and social care costs, with report author Ben Ansell calling for a "new fiscal contract" that taxes wealth and property more fairly.
- IPPR urges Labour to tax older, wealthier people more heavily
- Proposals include a new property tax and higher capital gains tax
- Ageing population set to sharply raise health and care costs
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Left-leaning think tank the Institute for Public Policy Research (IPPR) has published a report arguing that Britain's tax system currently falls more heavily on younger, working-age people than on older, often wealthier generations. It wants the Government to rebalance this by raising taxes linked to property, wealth and capital gains, while easing the burden on income earned through work.
The report matters because its ideas could feed into Chancellor John Healey's first Budget in October, at a time when the Government is under pressure to raise more money and speculation about tax rises is running high. Its specific proposals include scrapping council tax and stamp duty in favour of an annual property tax, taxing capital gains at the same rate as income, and charging national insurance on people who keep working past state pension age.
The debate reflects wider concerns about an ageing population, since the proportion of over-65s in Britain is expected to grow substantially in the coming decades, increasing pressure on health and social care spending. Supporters see this as a fairness issue between generations, while the proposals could prove controversial for older people who have built up wealth through homes and savings over many years.
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The case for
Advocates of the IPPR's proposals argue that the current tax system is skewed against the young, who face the double burden of income tax, national insurance and student loan repayments while wealth built up through property has been taxed far more lightly. They see this as a matter of basic fairness and economic efficiency: taxing work discourages employment and productivity, whereas taxing property and capital gains is less distortive and better reflects who has actually benefited from decades of rising asset prices. With an ageing population set to place growing strain on health and social care budgets, they argue a fairer, wealth-based settlement is the only sustainable way to fund public services without further penalising younger workers just starting out.
The case against
Critics warn that many older people are asset-rich but cash-poor, having paid off a mortgage over decades on a modest income, and a new property tax or higher capital gains levy could force them to sell homes or dip into savings simply to meet a tax bill unrelated to their actual cash flow. They argue it is unfair, even retrospective, to change the rules on people who made lifelong financial decisions, including saving prudently and investing in property, under a different tax regime, and that many pensioners already contributed heavily in tax over their working lives. There is also concern that extending national insurance to those working beyond state pension age could discourage older people from remaining economically active at a time when labour shortages are already a pressing concern, and that singling out one generation risks eroding trust in the fairness of the tax system more broadly.