Britain to Face BIGGEST Tax Rise in Decades? | IEA Podcast

In this Institute of Economic Affairs Podcast, Head of Media Reem Ibrahim hosts a discussion with IEA Executive Director Tom Clougherty and Managing Editor Daniel Freeman on the government's upcoming budget and various tax policy proposals currently being floated. The conversation covers a "tax proposal extravaganza" including potential reforms to property taxation, capital gains tax on primary residences, pension lump sum changes, and inheritance tax modifications. They examine how these proposals might affect the UK's fiscal position ahead of the anticipated autumn budget, with the government facing a significant fiscal gap of potentially up to £50 billion.

The discussion delves into the economic impacts of stamp duty and why replacing it with a proportional property tax could benefit the housing market, though the political challenges remain substantial. Clougherty explains how stamp duty creates harmful distortions by discouraging property transactions and keeping people in unsuitable homes, while Freeman highlights the contradiction between economically damaging taxes often being less politically unpopular. They also analyse proposals for capital gains tax on primary residences, concluding it would likely raise little revenue due to its similar distortionary effects to stamp duty, and examine potential changes to pension tax relief and inheritance tax rules.

The podcast concludes with an examination of recent research on universal basic income trials in the United States, where studies have shown disappointing results despite significant financial investment. Freeman explains how these trials, involving hundreds of participants receiving up to $1,000 monthly, failed to produce the expected improvements in health, education, or mental wellbeing outcomes, with the only consistent effect being reduced work hours. The discussion touches on how these findings relate to the UK's current benefit system and the importance of work requirements and conditionality in welfare provision.

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