The UK’s tax system should be overhauled to bring rates on wealth and assets into line with those on income, according to a report from the Institute for Public Policy Research (IPPR).
The report claims that bringing taxation for assets into line with income tax rates could raise over £90 billion over the next five years.
The IPPR is also calling for the removal of the capital gains tax (CGT) regime. It says that CGT rates are ‘substantially lower’ than they were pre-2008, and are currently taxed at much lower rates than income from work.
According to the IPPR, these lower tax rates for the wealthy are ‘fundamentally unfair’. They ‘distort economic behaviour and create opportunities for tax avoidance’, it added.
The IPPR recommends abolishing separate tax rates on capital gains by incorporating them into the income tax schedule. It also wants most of the current exemptions, allowances and reliefs removed, bringing capital gains in line with the taxation of earnings from work.
According to its modelling, these changes could raise up to £120 billion in additional revenue over five years, adjusted to £90 billion following potential behavioural changes.
Commenting on the report, Tom Kibasi, Director of the IPPR, said: ‘This is a matter of basic fairness. It is fundamentally wrong that people who get their income from betting on the stock and shares or playing the property market pay less tax than those who go out to work each day to provide for their families.’