A People’s Budget: How the public would raise taxes

If, how and when to raise taxes has always presented a political challenge. But with this year’s unprecedented government spending and our ageing population, it’s more important than ever to understand how the public feels about potential changes.

A People’s Budget is the most comprehensive UK study to date of public attitudes towards tax rises. It sets out how taxes on individuals could rise over the next fifteen years in a way that is acceptable to the public. It draws on a series of online deliberations that involved participants testing alternative tax proposals using the Demos Tax Calculator, and on a new nationally representative poll of over 2,000 UK adults.

We found that a large majority of the public are supportive of progressive tax rises, including 2019 Conservative voters. The report has found that more than half of the British public (58%) would support raising Income Tax for everyone by 2p in the pound, while raising the Personal Allowance so that those earning less than £20,000 do not pay any more. Only 17% of the public oppose this measure, whilst 2019 Conservative voters are more likely to support this measure (64%) than other respondents.

The nationally representative poll of over 2,000 people found that almost seven in ten (69%) of the public want to see Income Tax on earnings over £100,000 per year raised by 10p in the pound.

We also found that 46% of the public support equalising the tax treatment of capital gains with income from work, with 18% opposing it. The vast majority (63%) of the public also support making the self-employed pay the same National Insurance Contributions as employees, on the condition that the self-employed receive the same benefits as employees.

Demos also finds:

• 57% of the public support raising Income Tax on earnings over £50,000 per year by 5p in the pound, with 17% opposing or strongly opposing.
• 63% of the public support a one off 10% tax on wealth over £2m, excluding main homes and pension funds, with 11% opposing it.
• 49% of the public support limiting relief on pension contributions to 20%, with 19% opposing this. 
• People think increased taxation of gambling would be a good idea. Almost seven in ten (69%) people support charging VAT on gambling stakes, with just 12% opposing it.
• There is strong opposition to a 2p in the pound ‘social care tax’ payable by the over 40s only. Only 26% support it, while 45% oppose it. Even among those aged under 40, only 31% support it. 
• There is little support for greater taxation of pensions, other than restricting the amount of pension tax relief higher earners can access. 70% of the public feel that pensions should continue to be taxed at the existing lower rates than other forms of income.
• Only 37% of the public support applying Capital Gains Tax to gains of more than £500,000 on main homes, with 31% opposing or strongly opposing it.

Alongside the report, Demos has published an online Tax Calculator, where everyone can try out alternatives and see how much they would raise and what impact they would have on people with different incomes.