A people's budget

24 September 2020
  • In a year of unprecedented government spending, new research from think tank Demos, supported by the Standard Life Foundation, explores public attitudes towards tax rises.
  • The research finds that if taxes have to rise, more than half of the public support raising Income Tax for everyone except those earning less than £20,000, by 2p in the pound. Conservative voters are more likely to support this measure than the public as a whole.
  • Almost seven in ten of the public want to see Income Tax on earnings over £100,000 per year raised by 10p in the pound, with 70% of Conservative voters supporting this measure.
  • These two measures would raise an estimated £15.5bn in additional tax revenue.
  • Demos has launched a unique online Tax Calculator, where anyone can choose different possible changes to the tax system and see how much revenue it would raise.

New research from the cross-party think tank Demos - the most comprehensive UK study to date of public attitudes towards tax rises, based on polling and deliberative groups - has found that a large majority of the public are supportive of progressive tax rises, especially 2019 Conservative voters.

The report looking at public attitudes towards tax rises, A People’s Budget, 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, with 70% of 2019 Conservative voters supporting this measure.

Demos also found that 46% of the public support equalising the tax treatment of capital gains with income from work, with 18% opposing it. Conservative Party voters were more enthusiastic about equalising tax treatment than the average voter, with 54% of 2019 Conservative voters supporting this measure, and only 20% 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. A general increase in VAT is the least popular tax measure with the public, with only 37% supporting it, whilst applying VAT to private school fees is one of the most popular measures with 62% supporting it. 2019 Conservative voters were at least as negative about a 1p rise in VAT as other voters and even more positive about applying VAT to private school fees than other voters.

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.
  • 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 the basic rate, 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 it. Demos has calculated that introducing tax rises such as these that the public support by a comfortable margin could raise an additional £80bn a year over the next 15 years - in line with what is needed given the ageing population, and the increase in the national debt following Covid-19.  Alongside the report, Demos has published an online Tax Calculator - at tax.demos.co.uk - where everyone can try out alternatives and see how much they would raise and what impact they would have on people with different incomes.

Commenting on the findings, Ben Glover, Deputy Research Director at Demos and co-author of the report, said:

“Tax rises in the medium to long-term are inevitable. Not only do we face a significantly larger national debt due to Covid-19, but an ageing population means the increasing cost of our public services will need to be paid for. This presents a pressing challenge for the Chancellor as we move forward: tax rises are often only popular if someone else has to pay for them. “But our research points to a solution. The public will support a small increase in income tax for everyone - raising billions alone - provided the poorest are protected and the rich pay more. These attitudes have a broad base of support across the country, including among Conservative voters. We urge the Chancellor to take these views into account when he is considering any potential tax rises in the future.”

Mubin Haq, CEO at Standard Life Foundation, funders of the research, said:

“We clapped and cheered for the NHS and for our carers over lockdown, yet we desperately need more than warm gestures to meet our growing needs, especially for social care. The public don’t believe this should just be the responsibility of the over 40s or the richest in society but everyone should contribute. However, they do believe those with deepest pockets should be paying the most. Increasingly the public are moving ahead of where our politicians are. They strongly support a more progressive tax system, and this is particularly the case for Conservative voters.”

Download the report

See the calculator at tax.demos.co.uk