With international taxation thrown into the international spotlight by the G7 Summit earlier this month, we at Redfield & Wilton Strategies recently found that a majority of Britons support the introduction of a global minimum corporation tax rate. Looking at the topic of taxation at the national level, our latest research investigates Britons’ attitudes to existing tax measures in the UK and finds that there is far less agreement on Government policy in this domain, though a slight plurality supports the Treasury’s proposed changes to tax on pensions.
The public is evenly split on whether the UK Government should, in general, raise taxes (34%) or maintain taxes at their current level (34%). Meanwhile, 22% of respondents think the Government should lower taxes, with a further 10% unsure of their view.
Support for lowering taxes is highest among younger respondents, with pluralities of 18-to-24-year-olds (36%) and 25-to-34-year-olds (40%) saying the Government should lower taxes, perhaps reflective of their relatively lower earnings and disposable income. By contrast, pluralities of 55-to-64-year-olds (45%) and those aged 65 and over (44%) say the Government should raise taxes.
We also observe a difference in responses along party lines, with a plurality (43%) of 2019 Conservative voters thinking that taxes should be maintained at their existing level, compared to 28% of 2019 Labour voters. Roughly equal proportions of 2019 Labour voters (36%) and 2019 Conservative voters (34%) think taxes should be raised, but a higher proportion of Labour voters (26%) than Conservative voters (17%) think taxes should be lowered.
Political differences are less pronounced when it comes to views on the Government’s financial strategy. Overall, 40% of respondents think the Government should rely on spending cuts when trying to balance its finances, while 36% think it should rely on tax increases. A substantial portion—around a quarter (24%)—don’t know which approach they would prefer the Government to take.
2019 voters of the two major parties are broadly in agreement on the question of how the Government should balance its finances: 39% of 2019 Conservative voters and 37% of 2019 Labour voters say the Government should rely on tax increases, with the latter slightly more likely (43%) than the former (39%) to say the Government should rely on spending cuts instead. In line with the previously observed support for lowering taxes among younger respondents, this same age demographic also shows a strong preference for the Government relying on spending cuts, with majorities of 18-to-24-year-olds (60%) and 25-to-34-year-olds (51%) choosing this option.
Thinking about specific types of tax, the British public generally feels existing tax rates should remain the same, with the notable exception of tobacco and alcohol tax.
A majority (51%)—including 56% of 2019 Conservative voters and 50% of 2019 Labour voters—think income tax should remain at current levels. However, Conservative voters (31%) are more likely than Labour voters (25%) to say income tax should increase, and, conversely, Labour voters (25%) are more likely than Conservative voters (13%) to say income tax should decrease.
Views on capital gains tax are broadly similar among 2019 voters of the UK’s two main parties. An overall majority (52%)—encompassing 52% of 2019 Conservative voters and 49% of 2019 Labour voters—favour capital gains tax remaining the same, while 36% of Conservative and 35% of Labour voters think capital gains tax should increase. At the same time, there is marginally more support among Labour (15%) than Conservative voters (12%) for decreasing it.
When it comes to inheritance tax, however, we again observe differences along partisan lines. With a plurality (49%) of respondents thinking inheritance tax should remain the same—including pluralities of both 2019 Conservative voters (49%) and 2019 Labour voters (48%)—we observe more support among Conservative (30%) than Labour voters (25%) for decreasing this form of tax, and more support among Labour (27%) than Conservative voters (20%) for increasing it.
Notably, respondents from both sides of politics are in favour of increasing taxes on tobacco and alcohol products. Indeed, 56% of 2019 Conservative voters and 50% of 2019 Labour voters—51% of our sample overall—say tobacco and alcohol tax should increase. At the same time, a sizable proportion of Conservative (35%) and Labour voters (36%) say that this form of tax should remain at the current level, and 9% and 14% respectively think it should decrease.
Looking toward the future, Britons are divided—and with little discernible difference along party lines—on whether to introduce an online sales tax: a plurality (35%) opposes introducing an online sales tax, 32% support it, and 25% neither support nor oppose such an introduction. These results mark a slight shift in public opinion compared to February, when a plurality of 39% of respondents supported and 31% opposed the introduction of an online sales tax, along with 24% who neither supported nor opposed it.
This trend of division in public opinion is also reflected in our findings on post-pandemic changes to taxation. In light of ongoing discourse on the financial burden of coronavirus on government coffers, we asked the British public to what extent, if at all, they would support or oppose paying more tax after the pandemic, finding that 38% oppose and 36% support this prospect, with 23% neither supporting nor opposing it.
One specific scenario currently under consideration by the UK Treasury to help pay for the Government’s coronavirus response is to raise taxes on pensions by cutting the lifetime tax-free pensions allowance from about £1 million to £900,000, with pension savings above this amount incurring a 25% tax as income. 37% of Britons say they would support raising pension tax to finance the Government’s coronavirus response, 22% would neither support nor oppose this prospect, and 30% would oppose, with a further 12% unsure of their view. Support is marginally higher among 2019 Conservative voters (43%) than their Labour counterparts (36%).
It appears there is altogether little consensus among Britons when it comes to matters of taxation, with slight differences in opinion according to political affiliation. The public is divided on whether to raise or maintain tax levels, and whether spending cuts or tax increases are better to balance the governmental budget. Views are also split on the prospect of an online sales tax and potential post-pandemic tax increases. We observe the greatest agreement in views on specific taxes, with broad support—across political lines—for income tax, capital gains tax, and inheritance tax to remain at current levels, but for taxes on alcohol and tobacco to increase. Meanwhile, with confirmation due in the Autumn Budget, over a third of Britons support the prospect of raising taxes on pensions to finance government spending on the coronavirus pandemic.
