Amongst the many bad-tempered exchanges in ITV’s election debate last night, none was more heated than on the issue of raising taxes. But when the moderator, Julie Etchingham, ran through each parties’ key commitments on income taxes, it became clear there is not much to differentiate the offer between the two main parties. Both have ruled out raising income tax and national insurance. It’s clear both leaders are reading the mood of the nation as desperately crying out for lower (or at least not higher) taxes. But are we?
At first glance, it would seem the answer is yes. The Conservative party’s recent commitment to a ‘triple lock plus’ to raise the personal income tax threshold for pensioners is seen favourably by three out of four people. In the most recent Financial Fairness Tracker, we tested a suite of policies related to financial well-being and found the most common policy to help household finances selected as a priority for the next government was reducing council tax (43%), which seven in 10 said would benefit their household finances (70%) and the country overall (64%).
However, the Tracker also shows seemingly contradictory views. For example, twice as many people agreed that spending on public services should be increased, even if it meant taxes should rise for households like theirs (56%), than people who agreed taxes should be reduced, if it meant spending less on public services (24%). This mirrors findings from the most recent British Social Attitudes survey, which found that over half of people think government should increase taxes in order to spend more on health, education and social benefits.
Also at odds with the popularity of the ‘triple lock plus’, the Financial Fairness Tracker found more than six in 10 (64%) people over the state pension age agreed their households would be willing to pay more tax to fund public services.
Even among families on the very low incomes (up to £10,000 per year), over half (52%), would be willing to pay more tax to fund public services. Obviously, public services benefit us all, so a willingness to pay more taxes isn’t completely altruistic (nor should it be). But this is still a fairly astonishing commitment from these households living on the lowest incomes, given that 4 in 10 (39%) of them are in serious financial difficulty.
It's not just the poorest households who are willing to make sacrifices: when asked what the next government should prioritise out of a series of policies, almost half of people (44%) picked at least one policy that they did not believe would personally benefit their household finances.
So, how do you square these seemingly opposing views? The social researcher in me insists on pointing out that folks agreeing with a survey question is a long way off excavating their deepest held beliefs and values. But it also shows that people are aware of the complexity of the task facing the next government: there are no simple answers. Everything will involve trade-offs and balancing acts between properly funding public services and protecting people’s individual financial resilience. We want what is best for ourselves and the people we care about, whilst also recognising that sometimes the needs of others will come at some cost to us, and we are largely ok with that.
This more nuanced view on taxation has been borne out by other work the Trust has funded. For example, this study from Demos, which found that though inheritance tax is a generally unpopular tax, even those who are initially most negative about it are worried that cutting it will hurt public finances. Most people think Inheritance Tax should remain as long as the right threshold is set and loopholes closed.
Whoever forms the next government would do well to remember this: when it comes to decisions about tax and public spending over the next few years, people don’t necessarily expect simple solutions. We need an honest discussion of what is required to fund public services to an adequate level, and how to pay for it.