Ahead of next week’s Spending Review, the latest research conducted by Redfield & Wilton Strategies looks at Britons’ views on taxation levels in the UK and surveys perceptions of the Conservative Party’s stance on tax policy.
Regarding taxation in general, 40% of Britons overall think the Government should maintain taxes at their current level, compared to 21% who think the Government should raise taxes and 28% who think the Government should lower taxes.
Respondents’ preferred course of action regarding Government policy on taxation varies depending on their political affiliation. Support for maintaining taxes at their current level, for instance, is higher among 2019 Conservative voters (51%) than among 2019 Labour voters (30%). This latter demographic is instead more likely to think the Government should alter current levels of taxation, though opinions are split on the direction of such a change. While 35% of 2019 Labour voters, a plurality, think the Government should lower taxes, 25% conversely think the Government should raise taxes—compared to a respective 23% and 19% of 2019 Conservative voters who express these preferences.
We also observe generational differences in respondents’ views. While support for maintaining taxes at their current level increases with age, support for lowering taxes is significantly stronger among younger Britons. Whereas 37% of 18-to-24-year-olds and 40% of 25-to-34-year-olds think the Government should lower taxes, for instance, only 10% of respondents aged 65 and above share this view.
Looking beyond their personal preferences on the matter, 78% of Britons polled—including 83% of 2019 Conservative voters and 76% of 2019 Labour voters—think taxes will increase over the next three years. 10% expect taxes to stay the same, and only 5% of respondents expect a decrease.
These expectations of future tax rises fit with a general trend of progressively increasing taxation levels Britons observe. To this point, 46% of respondents—including 43% of 2019 Conservative voters and 51% of 2019 Labour voters—think someone with their income and marital status currently pays more in taxes than someone in the same circumstances did ten years ago, accounting for inflation. 22% believe the amount paid has not changed, and 14% think someone with their income and marital status now pays less in taxes than someone in the same circumstances did ten years ago.
With Chancellor Rishi Sunak having stated at the Conservative Party’s recent annual conference that tax cuts will only come once public finances are back on a “sustainable footing,” not only cuts in public spending but also further tax rises may be part of the Government’s immediate strategy to address the economic fallout of the coronavirus crisis. If an increase in taxes is necessary to pay for the pandemic, capital gains tax (36%) is the tax respondents would prefer to see increase the most. 20% further select income tax, 13% select national insurance, and 10% select inheritance tax. Pension tax is the tax respondents would least like to see increase, as only 2% select this answer. At the same time, a significant 20% of Britons polled also say they don’t know which tax they would prefer to see increase the most.
When asked by how much these taxes should be increased if doing so is necessary to pay for the coronavirus pandemic, majorities or pluralities say ‘a small amount’ with respect to income tax (50%), national insurance (46%), capital gains tax (34%), and inheritance tax (32%). A clear majority of 63%, by contrast, says that pension tax should not be increased at all.
Together with already announced measures such as the 1.25% increase in National Insurance contributions set to take effect in April 2022, the anticipation of further tax rises under the current Government appears to be impacting Britons’ views of the Conservative Party’s stance on taxation more generally.
To this point, 42% of respondents disagree that the Conservative Party currently stands for lower taxes, compared to 21% overall who agree and 28% who neither agree nor disagree. In fact, 42% associate the current Conservative Party with raising taxes, while 18% associate it with lowering taxes and 30% associate it with neither of these two options. As such, public opinion suggests the Conservative Party’s traditional reputation for favouring lower levels of taxation has changed.
2019 Labour voters are particularly likely to associate the current Conservative Party with raising taxes. 52% of this demographic say so, compared to 34% of 2019 Conservative voters. In terms of age, higher proportions of older Britons share this association. Whereas 54% of respondents aged 45 to 54 and 49% of respondents aged 55 to 64 say they most associate the current Conservative Party with raising taxes, 37% of 18-to-24-year-olds and 35% of 25-to-34-year-olds express this view—though it remains the plurality position even among these two demographics.
This change in the Party’s image could potentially lead to an electoral challenge for the Conservatives. While 44% of Britons polled say they would be neither more nor less likely to vote for the Conservative Party at the next General Election if the current Government further raises taxes between now and then, a non-negligible 34% say they would be less likely to vote for the Conservative Party under these circumstances. This percentage not only includes 49% of 2019 Labour voters, but crucially also 24% of 2019 Conservative voters—whose support, if lost, could leave the Party in a difficult position.
If the current Government were to raise taxes between now and the next General Election, support for the Conservatives among younger Britons would likely be more negatively impacted than support among older age groups. Whereas 34% of 18-to-24-year-olds and 38% of 25-to-34-year-olds say they would be less likely to vote for the Conservative Party at the next General Election if the current Government were to raise taxes between now and then, a still significant but lower 24% of respondents aged 65 and above say the same.
Overall, four-fifths of Britons expect levels of taxation to increase over the next three years, although only one-fifth is in favour of such a rise. As the Chancellor faces several tough choices over how to balance public finances, the current situation may be an opportunity for the Labour Party to appeal to new voters by putting forward future-oriented tax policies that benefit notably younger voters, who have been left disproportionately worse off by the pandemic and express a strong preference for lower tax rates.