‘Help the young by taxing baby boomers’

BABY boomers should pay higher wealth taxes to help the young, a former Conservative universities minister will say today.

In a speech delivered in Westminster, Lord David Willetts, who is also executive chairman at the Resolution Foundation, will warn that rising health and welfare costs in Britain mean “the age of tax cuts is over” for the baby boomer generation.

It comes as figures show that the taxpayer cost of the welfare state will double to £60 billion by 2040, up from around £29billion in 2015-16, meaning taxes will have to rise or services and benefits will need to be cut.

This burden should not be borne by already financially beleaguered young workers, Lord Willetts will argue.

Instead, it is time for the baby boomer generation to foot the bill, he will say, as they are about to retire on relatively comfortable pensions after having benefited from the welfare state their entire lives.

By contrast, today’s young people are earning less than people of the same age 10 or 15 years ago and are seeing benefits cut. To see that the cost is borne by older asset rich savers, rather than younger workers, Lord Willetts will recommend that higher capital taxes should be introduced to pay for the rising welfare bill.

He will say: “Politics is going to be very different as the baby boomers age. The age of tax cuts is over. Instead politics will be about who pays more and how much they pay. This is the moment when the chickens come home to roost for all of us, but the baby boomers in particular.”

One possible solution suggested by Willetts is changing the council tax system to apply a 1 per cent tax on the value of properties after their first £100,000. Doing this would add up to £9billion to revenues, he said.

Another solution he will suggest is lowering the inheritance tax threshold from £325,000, plus an extra £175,000 residential property band, but lowering the rate at which money is taxed from 40 per cent.

He added: “I have reluctantly come to see these kind of tax measures as becoming necessary because the alternatives are even worse.”