The Resolution Foundation has proposed vital fiscal changes, advising Labour to reform tax policies.
- Removing inheritance tax reliefs on agricultural and business estates could raise £2 billion annually.
- Aligning capital gains and dividend taxes might generate an additional £8 billion every year.
- Introducing road pricing could offset declining fuel duty revenues amid the rise of electric vehicles.
- The think tank calls for caution against raising stamp duty due to potential housing market impacts.
In a move to bolster the UK’s fiscal outlook, the Resolution Foundation urges Labour to consider scrapping inheritance tax reliefs on agricultural and business assets. This measure is projected to raise approximately £2 billion per year, contributing to the nation’s treasury under Labour’s proposed fiscal reforms.
Another substantial recommendation involves the alignment of capital gains tax rates with those on dividends and wages. By doing so, an estimated £8 billion per annum could be added to the government’s resources. This strategy forms part of a broader initiative to enhance tax revenues efficiently.
Given the transition to electric vehicles, traditional fuel duty is expected to decline. The think tank suggests implementing road pricing by charging drivers 6p per mile plus VAT. This approach addresses the diminishing revenues from fuel duty while ensuring continued funding for vital infrastructure projects.
The Foundation also highlights the importance of tax structures that do not impede economic activities. Raising stamp duty, as planned, by lowering its threshold to £125,000 could increase the tax burden on homebuyers, adding £6,250 to the cost of a £250,000 property. This, according to the think tank, could hinder efficient use of housing stock in the UK.
A Treasury spokesman acknowledges the need for tough decisions surrounding spending, welfare, and tax, as the government faces a £22 billion fiscal deficit. These decisions will be central to rectifying the inherited economic challenges, likely shaping upcoming budget policies.
The proposed reforms, though ambitious, seek to equip the UK with a more robust fiscal framework.
