Chancellor John Healey and Prime Minister Andy Burnham could raise £26bn through tax increases, according to a plan put forward by academics. Researchers at the Centre for Analysis of Taxation (Centax), including academics from the London School of Economics and Warwick University, have suggested hiking capital gains taxes and applying national insurance to other areas of income.
Centax's proposals aim to address imbalances in taxes paid by salaried employees and the highest earners. The report calls for capital gains taxes to be reformed and equalised with income tax rates, which researchers estimate could raise £19.7bn in 2030. It also suggests applying employer national insurance contributions (NICs) to partnership profits at LLPs, potentially raising £2.1bn, and Class 1 NICs to investment income from rent, savings, and non-dividend investment income, which could raise another £4bn.
The proposals are likely to generate debate in Westminster, particularly as a smaller fiscal headroom of up to £15bn could lead Healey to consider significant tax rises. However, the Labour manifesto pledged not to increase income tax, VAT, or national insurance for workers. Some economists, including Andy Burnham’s former economic advisers Jim O’Neill and Andy Haldane, have warned that changes to capital gains and investment taxes could harm growth.
Paul Johnson, former head of the Institute for Fiscal Studies, has stated that claims of increased government receipts from a capital gains tax hike are "nonsensical" and could cost the government £3.5bn in lost receipts. Robert Salter, director at Blick Rothenberg, noted that extending NICs to self-employed partners "could be quite controversial."