Taxes will have risen by a record amount this parliament, research finds

Work by the Institute for Fiscal Studies (IFS) found that taxes will amount to around 37 per cent, up from 33 per cent in 2019.

This means that the Government will be raising around £100 billion more in tax each year, the equivalent to £3,500 per household.

Economists at the think tanks said that no parliament has presided over a bigger increase in taxes, and predicted that although Rishi Sunak may announce some tax cuts by the time of the next election “there is no world in which this parliament – or indeed the period since Rishi Sunak became Prime Minister – turns out to be anything other than a tax-raising one.”

Ben Zaranko, Senior Research Economist at IFS, said: “This is not, for the most part, a direct consequence of the pandemic.

“Rather, it reflects decisions to increase government spending, in part driven by demographic change, pressures on the health service, and some unwinding of austerity.

“It is likely that this parliament will mark a decisive and permanent shift to a higher-tax economy.”

It comes as separate research from the Resolution Foundation and Nesta found that the total wealth of the richest 10 per cent of Britons grew 25 times faster than the poorest 30 per cent between 2006 and 2020.

Researchers said that the wealth gap is the widest in the developed world, second only to the USA.

The richest 1 per cent earn 13 per cent of the UK’s total income, just below the record levels seen before the 2008 global financial crisis, its report said, with real wages growing at just 0.06 per cent per year since 2009.

Generational divides, even outside young people, are stark, with around 36 per cent of people born in the 80s owning their own home by age 30 compared with 56 per cent of the 1970s cohort;

Experts who contributed to the report agreed that tax is “key and ripe for reform” after national wealth (a mix of finances, property and state assets) is now seven times the size of the economy, a gap that has doubled since 1991.

Researchers said this was not a result of households saving, but largely from “unearned” wealth, meaning that capital gains tax is among policies most ripe for reform.

Mike Brewer, Deputy Chief Executive and Chief Economist at the Resolution Foundation, said: “A concern about high income or wealth inequality is not just the politics of envy.

“Unequal societies tend to be less healthy, less trusting, and have more crime and violence.

“A vibrant economy doesn’t have to mean high inequality – it can just as well be due to market failings and inefficiencies that are a drag on economic growth.

“There is also developing evidence that high levels of inequality reduce social mobility. So taking steps to reduce the extent of income and wealth inequality, and to limit its damaging impacts, will be an essential challenge of the next two decades.”