Due to the current fiscal constraints facing the Government, it was always unlikely that this budget would satisfy all parties. While it is positive to see measures aimed at increasing tax receipts from those most able to contribute – including the introduction of a ‘mansion tax’, a modest rise in dividend taxation, and reforms to taxation in the highly-profitable gambling industry – other elements of the package raise serious concerns.
The decision to freeze income tax thresholds, for example, will push an estimated 780,000 additional people into the basic rate of tax, despite years of stagnating real wages. This effectively increases the tax burden on ordinary workers without addressing the wider structural inequalities in the system. Similarly, reforms to the salary-sacrifice scheme will limit the pension provisions available to savers across the UK, while reducing capital gains tax relief on disposals to employee ownership trusts risks discouraging business owners from transitioning to employee-owned models – an approach that could otherwise support more equitable wealth distribution.
Given the persistent scale of inequality in the UK, the Government might have delivered a more progressive budget by focusing on sectors currently generating extraordinary profits. For instance, the banking sector is experiencing its most profitable results in decades, and a targeted wealth tax on the country’s richest could have been a fairer, more effective way to raise revenue while addressing inequality. While there are some steps in the right direction, the budget ultimately fails to meaningfully tackle the growing gap between the richest and the rest of society.