Fairer taxes, smarter spending: A recipe for sustainable growth

Think tank: IPPR

Author(s): Pranesh Narayanan

September 27, 2023

This report by UK think tank IPPR looks at how rising tax levels can enable better living standards.

The UK economy has much bigger problems than high levels of tax. Rising long-term sickness is impacting labour supply, while the education and health systems are struggling with recruitment and staff capacity. Public infrastructure is quite literally crumbling. The UK is particularly vulnerable to high energy prices due to a highly energy inefficient building stock and an outsized reliance on natural gas for heating. The government needs more tax revenues to tackle societal challenges such as climate change and the aging population while simultaneously delivering growth.

This briefing demonstrates that ‘record’ levels of tax are unremarkable internationally, and shows how rising tax levels can enable better living standards. Taxes can be raised in a fairer way to enable smart spending, and we argue that this kind of smart public spending is needed to achieve sustainable growth. We also challenge the idea that tax is always unpopular; in fact, voters support higher taxes if they are linked to spending on services. Despite the pressures of the cost-of-living crisis, 55 per cent of British people support an increase in taxes to fund higher spending in health, education, and social benefits. And 63 per cent of voters believe that the wealthy are under-taxed in the UK.