Robert Palmer is Executive Director of Tax Justice UK.
We are living through deeply unusual times. However, at least one thing has remained constant in Westminster – the swirl of leaks and counter-briefings in advance of the autumn budget. Much of this is political theatre with various factions jockeying to influence tax and spend decisions.
The Chancellor is facing some tough calls. In the long run, the “levelling up” agenda will require extra spending. Tax rises are on the cards, and Rishi Sunak’s room for manoeuvre is limited by manifesto pledges not to increase income tax, VAT, or national insurance contributions.
The latest big newspaper splash claimed that the Treasury is considering a suite of higher taxes on the well off. This news was met with incredulity from many Conservative backbenchers, who argued that any such changes would choke off the economic recovery and would go down badly with voters.
On the first point, the critics are right. Tax rises in the middle of a recession are generally a bad idea, with almost all economists pointing to cheap borrowing and Quantitative Easing as the best way to “pay for Covid”.
However, Conservative MPs are out of step with public opinion on the popularity of higher taxes on the rich. My organisation, Tax Justice UK, has teamed up with Survation and the University of Sheffield to carry out a major public attitudes research project, based on 11 focus groups and two polls.
The results are out today: we found 74 per cent of people want the wealthy to pay more tax. Almost no one is calling for tax cuts.
We found that Conservative voters have shifted in favour of tax rises during lockdown. The proportion of Conservatives who said they were personally prepared to pay more tax to support public services went up from 41 per cent to 46 per cent between our March and June polls.
A Conservative supporter in Hastings said: “I would pay more tax if I could see real change – education, minimum wage, cost of living, less poverty.”
Our research also shows that Sunak would get strong backing for the measures he’s rumoured to be considering in the forthcoming budget. We tested attitudes towards aligning capital gains tax (CGT) with income tax, increasing corporation tax, and cutting pension tax relief for higher earners. Voters were in favour of all of these ideas.
But what’s even more interesting is that during lockdown Conservative support for these reforms has increased dramatically. For example, Conservative backing for higher corporation tax leaped from 61 per cent in March to 74 per cent in June. On increasing capital gains tax rates to income tax levels – last done under Margaret Thatcher – Conservative support jumped from 58 per cent in March to 67 per cent in June.
In fact, our polling shows that on a whole range of wealth taxation reforms, Conservative voters are more likely to back higher taxes than the general public.
One Conservative voter in Wrexham told us, “if someone earns over a certain amount their tax should be increased. Not the average Joe who is just trying to live.”
While people backed higher taxes on the better off, voters believe that having wealth is key to providing security for themselves and their families. For this reason, language that was seen as anti-aspirational, or bashing the rich, went down badly.
These findings reflect the new coalition that Boris Johnson was so successful at crafting at the last election, with big wins amongst working class voters and in traditional Labour heartlands. Research has found that Conservative voters are relatively “left-wing” on economics, while lean right on cultural issues. This is particularly true amongst those who voted Labour in 2017, but switched to the Conservative party in 2019.
In this political context, raising taxes on wealth would be the smart thing to do. Sunak and Johnson could point to their manifesto commitment to “end the arbitrary tax advantages of the richest people in society”. Perhaps this time round, it’s the Conservative backbenchers opposed to tax rises who don’t reflecting the public mood.