A senior Conservative is to urge Theresa May to target the wealth of baby boomers to prevent their children’s generation being forced to stomach a 15p rise in income tax to cover the spiralling cost of healthcare, education and welfare.
Former minister David Willetts will argue that public spending on the three areas is due to rise by £60bn a year by 2040, which could be funded by either taxing the homes of wealthy pensioners or by squeezing younger people’s take-home pay.
“As we baby boomers sit on so much wealth – which has continued to grow even as incomes have stagnated – one obvious source is for us to make a contribution through capital or property taxes,” Lord Willetts will say in a speech on intergenerational fairness.
Willetts, who was in David Cameron’s cabinet and now chairs the Resolution Foundation thinktank, will admit that he is addressing “difficult and unpalatable options”, particularly for his Conservative party, but will say the debate can no longer be delayed.
“By the end of the next decade, the fiscal gap is set to grow to the equivalent today of £20bn a year and then to £60bn after another decade. That translates to an income tax hike of 15p in the basic rate by 2040, the burden of which will overwhelmingly fall on the generations following baby boomers,” he will say.
“Is that kind of tax rise really the legacy we – a generation that owns half the nation’s wealth – £13tn of wealth – want to bequeath to our children and grandchildren?”
The Tory peer will hit out at “clumsy”…