Michael Burton 11 November 2020

Think tank calls for new health and social care tax

Think tank calls for new health and social care tax image

A new health and social care tax raising £17bn should be the centrepiece of sweeping tax increases to raise £40bn a year, according to a new report from think-tank the Resolution Foundation.

The report proposed a 4% flat-rate health and social care levy paid above £12,500 that would apply to all forms of income, including capital gains, and to most people, including pensioners.

As this would be coupled with a 3% cut in national insurance contributions (NI) employees on incomes below £19,500 would be better off.

Some £17bn would be raised, with £6bn set aside for social care, and in the long run it could replace NI altogether.

The report read: ‘This approach would deliver a large fraction of the necessary consolidation in a highly progressive way and support broader national challenges that have been put into stark relief by the pandemic.’

It said council tax should be replaced by a new property tax based on up-to-date valuations, with a supplement of 1% on properties over £2m raising £1.4bn.

The report argued that ‘fiscal consolidation’ of £40bn annually should only begin in 2024/25 and should be achieved through tax rises rather than public spending cuts as the latter is less practical after a decade of austerity.

It added: ‘There is a consensus that cutting government spending has a larger negative impact on the economy than increasing taxes.’

Keeping the safety net image

Keeping the safety net

Local authority leadership is invaluable to Transitional Safeguarding and councils are ideally placed to enable complexity-attuned commissioning, says Dez Holmes.
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