Think tank demands income tax reform

The Government has been urged to increase capital gains tax to bring its rates in line with income tax ahead of Budget 2019.

The Institute for Public Policy Research (IPPR) claimed the Treasury could collect an extra £90 billion over the five years if it were to introduce the measure this autumn.

Another suggestion in its Just Tax report was to remove the capital gains tax exemption on death to raise a further £15bn by 2024.

The IPPR also slammed the current income tax bands as "no longer fit for purpose" as it dates from a "pre-computer age".

It proposed taxing all earnings, dividends and savings under one income tax schedule with an increasing marginal tax rate as income rises.

Henry Parkes, senior economist at the IPPR and co-author of the report, said:

"We believe these proposals amount to a transformation of the taxation of income, which would move us towards a more economically just system.

"This should warrant serious consideration for any government interested in raising revenue in a progressive manner."

A radical overhaul of taxation could be on the cards given that all bets are off if a general election takes place in the coming months.

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