The majority of UK workers are willing to pay extra income tax to plug the black hole caused by Covid-19, new research has shown.
According to AJ Bell, over three quarters (77%) of workers would be willing to accept on average 3.9% more income tax, with almost a fifth (19%) prepared to pay an extra 5% or more.
The research found that 70% of people believed the government was right to increase borrowing during the crisis, and two-thirds (67%) agreed that we all have a responsibility to contribute.
Tom Selby, senior analyst, AJ Bell, said: “Battling back from Covid-19 is going to be a long hard journey. As the UK government eases lockdown restrictions and state support for the economy is slowed scaled back, debate will inevitably pivot towards how the near £300 billion black hole in public finances should be filled.
“While the Coalition Government opted for public spending cuts to tackle the deficit after the 2008 financial crash, Boris Johnson is reportedly reluctant to follow a similar path. If this is the case then tax rises will likely be necessary to help balance the books – and Brits appear ready to do their bit.
“While policymakers will need to be careful not to stifle an economic recovery by hiking income tax rates too much, there appears to be general acceptance that the COVID-19 costs will need to be repaid and that tax rises are therefore a necessary evil.”
According to AJ Bell, over a third (37%) of people cited dividends and capital gains as the “most acceptable” options for higher taxes. Just over a fifth (22%) backed the idea of inheritance tax taking the brunt, while 21% felt national insurance contributions should increase.
In contrast, pension cuts were deemed the least popular, with removing the state pension triple lock (10%) and restricting pension tax relief (9%) the least favoured options.
The majority of people said they would also prefer to pay lower amounts over a longer period of time (85%) than large amounts in a shorter space of time (15%).
Selby added: “Given battling this pandemic has required a collective effort, it would make sense for all of us to help foot the bill. Indeed, this may be one of the few times in history where a Government could hike income tax – perhaps via a time-limited COVID-19 surcharge – without necessarily wrecking their election chances.”
