Inter-Generational Divide Erased by Pension Tax

The Resolution Foundation, an organization engaged in research and policy matters has put forward the suggestion that a payment of £10,000 should be given to young people. Pensioners should be subjected to more tax. If these policies are implemented, then the NHS can be funded better and social cohesion could be had. Lord Willetts, the Chairman of Resolution Foundation, said the contract between the old and the young has broken down. He said that without any action, the anger of young people can only rise. The aim of the organization is to improve the outcomes for people having modest or low incomes. Lord Willetts was universities minister when David Cameron was the British Prime Minister.

Resolution Foundation report

The Resolution Foundation had published a detailed report where it asked for changes to the existing tax regime. This changes will assist to heal the increasing economic tensions that are present between the generations. The list of recommendations includes a grant of £10,000 to all adults below 25 years of age. This would be funded by “lifetime receipts tax” which would substitute for inheritance tax.

The Resolution Foundation also recommended the scrapping of the council tax. It should be substituted with new property tax. The tax should be imposed on the wealthier homeowners. The proceeds from reforming the property tax will be used to halve the stamp duty for all first-time viewers. Public funding must be increased for better social care. National Insurance contributions must be made on earnings for individuals above the state pension age.

Detailed plans

The Intergenerational Commission report by the foundation asks for a levy of £2.3 billion for the NHS to be paid by upwardly revised national insurance contributions. The latter will be paid by individuals above 65 years of age. The report says that all people must receive £10,000 when they reach 25 years of age to assist payment for a home deposit, begin a business or improve skills or education. It was proposed by the report that such money be raised by abolishing the inheritance tax. The latter should be substituted with lifetime £125,000 limit before taxes come into the picture.

The commission has estimated that such schemes would raise about five billion pounds. According to Lord Willetts, a serious problem of ensuring fair deal across generations exists. Older individuals worry about an adequately funded healthcare system, middle-aged people unable to buy own homes and younger people witness their salaries staying the same over the years.

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