A wealth tax tops the list of measures the public would back
Given the parlous state of the UK finances, Labour’s 2024 manifesto commitment to not raise taxes that working people pay is making life hard for the government.
Recent YouGov data shows that only 14% of Britons would support an increase in VAT, while 22% apiece back increases in national insurance or the basic rate of income tax. The public are divided 42-43% on increasing the higher rate of income tax.
As a result of the government’s self-imposed restrictions, Rachel Reeves will need to get creative. Helpfully (or not) she has been bombarded with calls for tax reform from all quarters.
Now a new YouGov survey has put 12 of these proposals to the British public to see which they would support in principle.
Top of the list is the Green Party policy of introducing a wealth tax of 1% on assets above £10m and 2% on assets above £1bn, a move which 75% of Britons would support and only 12% oppose.
In second place is a ‘mansion tax’ on homes worth more than £2m, as proposed by Vince Cable all the way back in 2012, which garners the support of 69% of the public.
Third comes an “exit tax” for rich people relocating themselves out of the UK for tax purposes. This would entail requiring emigrees to pay tax on all unrealised capital gains, with the UK and Italy being the only two developed economies that don’t have such a tax according to Dan Neidle of Tax Policy Associates, who set out the case for and against introducing an exit tax.
A majority of Britons also support reforming council tax to make it proportionate to the value of the home (as opposed to the current system based on which value band it falls in), at 56% - a move proposed by the IFS’s chief executive Helen Miller in an FT interview on how to tax the British people if you could start from scratch.
The only other policy from our list that received more than 50% support is pegging tax thresholds to inflation (52%), as proposed by Judith Freedman, an emeritus professor of tax law and policy at Oxford university, and others in the same article.
Nevertheless, many of the other policies we asked about were still more supported than opposed.
A proposal from the 2024 Reform UK manifesto to incentivise employers to hire British workers by raising employers’ National Insurance to 20% for foreign workers while keeping it static for British citizens* is supported by 50% and opposed by 32%.
A proposal by economist Tim Leunig for homeowners, rather than tenants, to pay property taxes, is backed by 48% versus 34% opposed.
Several tax experts, told the FT that if they were to redesign the UK tax system from scratch they would merge income tax and National Insurance, a move which 43% of the public would support but 26% oppose.
A policy suggestion which proves divisive is scrapping fuel duty and replacing it with a road use tax, whereby road users pay for the distance they travel on public roads. While 38% of Britons support this proposal – which may prove more likely to be instituted than others on this list, given the government will need to find ways to replace the fuel duty revenue lost due to the switch to electric vehicles – while 41% are opposed.
Another proposal by Neidle on the perennially unpopular stamp duty proves less popular. Told the idea to “abolish stamp duty, which is paid in one lump sum upon the purchase of a home and replace it with a monthly land value tax based on the value of the site on which the home sits”, 34% of Britons backed this idea, but are slightly outnumbered by the 39% opposed. A prior YouGov survey found that the Conservatives’ recent proposal to simply scrap stamp duty (without suggesting that anything would replace it) was supported by 63%.
Recent reports have suggested that Tony Blair believes that income taxes need to come down, with the top rate of tax to be reduced to below 40%. This is much more notably unpopular than other policies we asked about, with 48% opposed and only 29% in support.
By far the least popular measure we asked about though was a flat tax, a perennial desire on some sections of the right, with Kemi Badenoch last year describing it as an “attractive idea” (although she went on to say it was currently unaffordable). Fully 63% of Britons oppose setting income tax at the same level for everyone, with just 20% in favour.
Where do voters stand on tax reforms?
Across the 12 policies we asked about, the only two to garner net support across all five main parties are the wealth tax and the mansion tax (although an exit tax is also widely supported, but with Reform UK voters split down the middle).
While these measures are popular, classic ideological differences are present, with support stronger among Green, Labour and Lib Dem voters than their Tory and Reform counterparts.
Unsurprisingly Reform voters and Conservatives are more supportive of increasing employers’ NI for foreign workers, and reducing the top rate of income tax (with Reform voters the only group in net support of this latter measure).
* the Reform manifesto had a rate of 13.8% for British citizens, which was the rate prior to Labour’s increase to 15% this year. For simplicity we amended the policy slightly to reflect the current rate of NI
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Photo: Getty
