Baby boomers must pay higher wealth taxes, says Tory former minister
Lord Willetts said rich older generations should bear the costs of their healthcare and welfare as they age.
The “baby boomer” generation must pay higher wealth taxes to fund health and welfare spending as costs spiral as a result of an ageing population, a Tory former minister has said.
Lord Willetts said higher wealth taxes are needed unless the burden of paying for an ageing population is to be placed entirely on the shoulders of young people who are already struggling to match the living standards of their parents.
He will cite Resolution Foundation research showing that by 2030 spending on health, education and social security will rise by £20 billion in today’s money, and by £60 billion by 2040.
The extra spending, almost entirely driven by health costs, would need to be covered by a massive 15p hike in the basic rate of income tax to cover the funding gap until 2040, unless reforms are made elsewhere.
In a speech at the Resolution Foundation’s Westminster headquarters, its chair Lord Willetts will say: “The time has come when we boomers are going to have reach into our own pockets. The alternative could be an extra 15p on the basic rate of tax, paid largely by our kids.
“Is that kind of tax really the legacy we – a generation who own half the nation’s wealth – want to bequeath our children and grandchildren?”
The peer will call for an overhaul of inheritance tax and council tax, on which a the proportional tax rate for a family in a £100,000 house is five times that of someone in a million-pound property.
The age of tax cuts is over Lord Willetts
He will say: “For 30 years Britain has enjoyed a time when the baby boomers were at their peak earning power. We benefited from lower pressures on public spending. Politicians talked as if tax cuts were the normal state of British politics.
“But we are now at a tipping point. The baby boomers are moving into retirement and there are fewer younger working age people coming up behind them.
“As we at last emerge from deficits the recession gave us in this decade we need to look forward to the pressures an ageing population is set to give us in the next.
“Politics is going to be very different as the baby boomers retire. The age of tax cuts is over.”
He will add: “Unless we act, at some point we will face a choice between changing our approach to taxation, or cutting access to the NHS and letting social care get into an even deeper crisis. We can’t delay that debate any longer.”