UK Policy Briefing
Taxation and gender: Briefing for a new government
This briefing covers taxation reform to make it more progressive, more inclusive and to challenge the view of tax as a burden.
Summary
Tax is important because it raises revenue that funds critical social infrastructure. This includes all our public services, such as the NHS, adult social care, education and childcare, and our social security system.
Fair taxation is the means by which individuals and companies can make their proportionate financial contribution to a well-functioning society.
Because of structural gender inequalities in the labour market and society – and because women are more likely to be unpaid carers – women rely heavily on public services. Cuts in public services therefore have a disproportionate detrimental impact on women.
Recommendations
Taxing wealth directly
- Wealth inequality has increased even more than income inequality over recent years. The under-taxation of wealth disproportionately benefits men because they have more wealth and reinforces gender gaps in income and wealth.
- A wealth tax of 2% on assets over £10 million would raise up to £24 billion a year.
- The system of Inheritance and Capital Transfer Taxes should be reformed so that lifetime receipts, rather than bequests, are progressively taxed at income tax rates, incentivising the distribution of wealth to more recipients.
Equalising capital gains tax and income tax
- All forms of income and capital gains should be taxed in the same way as earnings. Equalising Capital Gains Tax and income tax rates could raise up to £16.7bn per year.
Reform to personal taxes
- The UK raises less than similar European countries from income taxes and social security contributions. For the income tax system to promote gender equality and be fairer, and at the same time provide increased revenue, it needs to be more progressive and inclusive, with a steeper rise in rates from a lower basic rate as well as a lower personal allowance.
- National Insurance Contributions should be made fairer by abolishing the Upper Earnings Limit and making NI payable on all forms on income and by those above State Pension age.
- The Marriage Tax Allowance and the Higher Income Child Benefit Charge make one partner’s tax liability depend on the other’s income, undermining the right to independent taxation. These measures should be abolished.
Fairer taxation of companies
- The excess profits of oil and gas companies should be taxed at near 100% and the loopholes in the current Energy Profits Levy removed. New ways of using tax to prevent environmental damage that do not increase inequalities should be explored.
A wholesale reform of the tax system – including how it taxes inheritances, wealth, capital gains, property, earnings and profits and the use of tax allowances – is needed to make it more progressive, less open to abuse and better able to contribute to the funding of public expenditure. Without such reform gender inequalities will widen.