An independent think-tank focused on improving living standards for low to middle incomes has released a report discussing their findings on how to avoid long-term austerity in the UK. The same think-tank has calculated the real living wage since 2018.
The Treasury has borrowed an additional £175 billion this year compared to 2019 - and that is only based on the first six months of the year. The Chancellor has already stated that economic measures taken due to the pandemic will need to be 'paid back', but he has been unclear on how this will be practically implemented.
The think-tank's report, available at the resolution foundation website, states the government needs to create a new health and social care levy, set at 4 percent on all incomes over the personal allowance (£12,500).
They also suggest cutting employee NICs by 3 percent (to 9 percent) and removing class 2 NICs for the self employed altogether.
The way the combination of the aforementioned changes work would mean only those earning over £19,500 would pay more tax.
The think-tank states raising corporation tax to 22 percent from the current 19 percent would bring in an immediate £10 billion. It also states that personal tax allowances, and all thresholds should remain frozen for the near future - meaning in real-terms more tax is paid.
Another suggestion is to implement a 'windfall tax' on firms that profited massively due to the crisis as well as the contractors who were provided pandemic project contracts.
The above would then be compounded with stealth wealth taxes by removing reliefs and allowances for capital gains, inheritance tax and increasing council tax for the most expensive homes (worth £2m+).