Possible tax rises

PM set to back tax to cover social care costsBoris Johnson is reportedly backing proposals for a new tax to pay for reforms to Britain’s social care system. A Government source has told the Times that the Prime Minister is “comfortable with some sort of tax” to fund universal social care, a move that could help reduce the burden on families. The policy is also likely to include a cap on the amount people have to pay towards their own care. The Times says that the cost of any reform could exceed £10bn and suggests Chancellor Rishi Sunak wants the PM to set out a funding mechanism alongside the policy. While a dedicated social care levy is among options that have been proposed, there is said to be concern over a new tax, with officials believing it risks breaking a manifesto pledge not to raise income tax, national insurance or VAT. Some cabinet ministers believe that unless a wealth tax is introduced, any levy would be an income-tax rise. A minister who has voiced concern said: “We surely don’t want to just borrow more and more to pay for this … So it would mean a broad-based tax, and because of our manifesto that is a problem.” The Times looks at the options open to policymakers, suggesting: an income tax increase; a “social care levy” on income; an over-40s tax; pensioner taxes that could see them paying national insurance and having some benefits means-tested; and an estate tax.