5. Transform the tax systems across the UK
What needs to happen?
Transformation of the different tax systems across the four nations of the UK is a key part of building a caring economy. The ways that taxes are raised can themselves reduce inequalities and promote wellbeing and sustainability, by impacting on the distribution of post-tax income and wealth, and by impacting on behavioural incentives, such as a frequent flyer levy. Taxes also have an indirect effect on equality, wellbeing and sustainability as they allow for financing of public spending to pursue these objectives.
Creating a caring economy requires the UK’s tax systems to be transformed so that:
1. More revenue is raised to spend more on social security and public services
2. The structure of taxation is reformed to make it more progressive and the proportion of revenue raised by income, wealth and corporation taxes is increased.
- Reform the system so that it is more progressive and raises more revenue, including through abolition of poorly designed tax reliefs, allowances and exemptions which aid tax avoidance and mainly benefit better-off men
- Overhaul the taxation of wealth and income from wealth, including equalising the rate of Capital Gains Tax with income tax and abolishing its additional tax-free allowance, taxing unearned income at same rate as earnings, converting inheritance tax into a tax on lifetime gifts, and reforming council tax
- Bring the corporation tax rate back up to 24% and ensure multinational companies can’t avoid it
- Reintroduce genuine independent taxation of income