UK tax system ‘unfair’, says Ed Miliband

27 Jun 18

A sense of unfairness contributed to the Brexit outcome and this is reflected in the UK tax system, Ed Miliband has said.

The former leader of the opposition said with the “overriding principle” of any tax reform after Brexit should be to “restore a sense of fairness”.

Speaking at the all-party parliamentary group for tax seminar What Brexit means for Tax yesterday, Miliband noted that the result of the referendum was due in part to a feeling that there was “one rule for one set of people”.

“You do see it in the tax system,” the former Labour leader said.

Miliband identified some key areas of reform to make a fairer tax system:

  • Putting an end to loopholes and evasion

  • Having a debate on and what the correct level of corporation tax should be

  • Restoring progressivity to the tax system

  • Raising resources for public services.

David Willetts, Conservative peer and chair of the Resolution Foundation think-tank, saw “marginal” opportunities for reform in the tax system as a result of Brexit.

He told the APPG audience: “In reality Brexit will give us modest room for manoeuvre on tax”, but added that he would like to see changes to corporation tax.

“I don’t think it’s necessary to go down to 17%” he said, and noted that the UK’s corporate tax rate is significantly lower than other countries in the G7.

The average corporate tax rate for the G7 currently stands at 29.57%, according to nonprofit organisation, the Tax Foundation.

Willetts agreed with Miliband’s assertion that taxes must be used to raise resources for public services.

He said: “[The Resolution Foundation] estimate, just to meet the kind of promises that people from all political backgrounds expect - notably but not only, our publicly funded NHS - you would find public spending rising on top of inflation by £24bn by 2030 and by £63bn by 2040.

“We are moving to an environment of more public spending and the debate becomes which taxes you raise in order to fund them.”

Willetts suggested that tax hikes to support health care should not just be put on the younger, working age population. He talked about the findings of the Resolution Foundation’s Intergenerational Commission, which has found the financial pressures on younger people today are greater than for those on their parents. 

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