Study calls for overhaul of Capital Gains Tax

The Institute for Public Policy Research has called for wealth to be taxed at the same rate as income tax in a radical overhaul of the tax system. Describing the UK as one of the most ‘unequal countries in the developed world,’ the study by Institute for Public Policy Research (IPPR) warns income inequality could be set to worsen as capital and property ownership become more important sources of income generation. The IPPR believes this divide could be narrowed if wealth is taxed at the same rate as income, which could boost the government’s coffers by £90 billion over the next five years in the process.

The study suggests that it is profoundly unjust that those who work for their incomes are taxed more highly than those whose income is derived from wealth. This situation is all the worse when we consider that the wealthiest are less likely to generate their income from labour than the rest of us. Among the richest 1%, over one-quarter of total income is generated from dividends and partnership income alone. To address the balance, the IPPR has called for capital gains tax (CGT) on the sales of shares, bonds, property and other investments to be paid at same rate as income tax.