The Resolution Foundation has suggested bold tax reforms for the UK Labour Party to consider in their budget proposals.
- Removing inheritance tax reliefs for agricultural and business assets could add £2 billion annually.
- Aligning capital gains tax with dividend and wage rates might generate £8 billion each year.
- The proposal includes introducing road pricing as a new source of income, replacing declining fuel duty revenue.
- Concerns were raised about lowering the stamp duty threshold, which may hinder housing stock efficiency.
The Resolution Foundation has proposed significant tax reforms to the UK Labour Party, suggesting that these changes could help address rising fiscal demands. Key recommendations include the removal of inheritance tax reliefs for agricultural property and business assets, a move expected to yield £2 billion per year.
Aligning capital gains tax rates with those charged on dividends and wages is another major suggestion. This measure is projected to generate an additional £8 billion per year, reinforcing the argument for a comprehensive tax restructuring.
In response to the shift towards electric vehicles reducing traditional fuel tax income, the Foundation has also recommended the introduction of road pricing. This system would potentially charge drivers 6p per mile, plus VAT, offering a sustainable model for infrastructure funding.
The think tank has also expressed concerns over the impending change to stamp duty rules. The threshold is set to drop from £250,000 to £125,000 by April 2025, effectively increasing the tax on a typical £250,000 home transaction by £6,250. Critics argue this could be an economically inefficient method of revenue generation, potentially impacting the housing market adversely.
A Treasury spokesperson commented on these proposals, highlighting the necessity for tough decisions moving forward. “Following the spending audit, the Chancellor has been clear that difficult decisions lie ahead on spending, welfare and tax to fix the foundations of our economy and address the £22 billion hole the Government has inherited. Decisions on how to do that will be taken at the Budget in the round.”
The think tank’s proposals aim to realign the UK tax system with current economic realities while ensuring sustainable revenue generation.
