Will a tax on pensioners really help to heal the intergenerational divide? 

22/05/2018 10:23


With generation X seeking out ambitious job roles and aspiring to move out of their parental home and the older generation living longer than ever and many continuing to work, it seems that steps should be taken to bridge the gap between these two groups.

 

A suggestion has recently been put forward by the Resolution Foundation. The British think tank endeavours to improve the quality of life for individuals in low and middle-income families and feels like a £10,000 cash boost for the young and a rise in the taxes for pensioners could go some way to bridge the gap.

 

So, what exactly would this entail and just how feasible is it?

 

The chairman of the Resolution Foundation feels that the contract between the young and old has ‘broken down’ and without drastic and sudden action, the younger generation will become increasingly angry. 

 

Suggestions put forward by The Resolution Foundation include:

 

  •  A £10,000 payment being given to all people at the age of 25. The payment would be funded by a newly issued ‘lifetime receipts tax’ that would replace the current inheritance tax.
  • Making the financial earnings of those that are above state pension age subject to National Insurance contributions.
  •  Abolish Council Tax and replace it with a new property tax that would target wealthier homeowners. 

 

The report that has been put forward by the organization is calling for an NHS ‘levy’. The figure would total £2.3bn and would be funded thanks to an increase in national insurance contributions, paid by those that are over the age of 65. 


The £10,000 payment that individuals would receive at the age of 25 could be used to pay for a deposit on the home, improve their education or even start their own business. With house prices rising though, there is concerns that this payment would do little to assist those ready to progress onto the property ladder or expand on their potential in the workplace.

Having said that, the proposals put forward by the Resolution Foundation would also mean the scrapping of the Council Tax system, which would be replaced by a new form of taxation that could target those more financially secure and that own their own property.


While the suggestions seem to take into account the best interests of both sides, just how far could they really go to wipe out years of political inertia?

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