Budget speculation: Old for young tax plan to promote “intergenerational fairness”
Philip Hammond, Chancellor of the Exchequer, is thought to be examining tax breaks for younger people paid for by older workers to promote “intergenerational fairness”.
According to reports, which are yet to be confirmed by the Treasury, the tax break would be offered to workers in their 20s and 30s and would be paid for by reducing tax relief for people approaching retirement.
This proposal, ahead of the Autumn budget next month, has been met with mixed responses.
Former Conservative minister Lord Willetts said he would support “anything” that rebalanced the tax system in favour of young people.
“If you are 30 now, you are probably earning less than someone who was aged 30 10 or 15 years ago. So anything that rebalances and helps younger people, I would be in favour of,” he told BBC Radio 4’s Today programme.
Whilst senior Conservative backbencher Jacob Rees-Mogg told the Daily Mail that he thought the tax “rebalancing” concept “perverse” way to respond to Mr Corbyn’s popularity among younger voters. Mr Rees-Mogg also stated that it would create “further opportunities for tax avoidance” and would add “further complications” to an already complex tax system.
Industry pensions experts have also responded with mixed views.
During an interview with the FTAdviser, Tom Selby, senior analyst at AJ Bell, said that such idea “would be a nightmare to implement both practically and politically”.
Whilst Sir Steve Webb, director of policy at mutual insurer Royal London and the former pensions minister said that the plan would in fact be plausible: “We had different tax allowances for the over 65, different minimum wages for the under 25, it would be not impossible.”
However, Mr Webb argued that the impact would be minimal “The sort of amounts of money you would get from cutting tax relief, in a way that would be politically acceptable, spread across millions and millions of younger workers, would result in a tiny amount per head basically.”