The Chancellor Rachel Reeves has been urged to launch a £6billion tax raid on pensioners, landlords and the self-employed.
The Resolution Foundation, which is closely linked to senior ministers, wants the Chancellor to cut 2p from employee National Insurance while adding the same to income tax.
The so-called ‘2p switch’ would leave workers’ pay packets untouched while spreading the tax burden across groups currently outside NI, including pensioners, landlords and the self-employed.
The ideas are likely to get a positive hearing from Treasury minister Torsten Bell who is a former chief executive of the Foundation. He is both the Pensions Minister and responsible for shaping broader economic policy, including tax reforms and fiscal strategies.
Adam Corlett, a principal economist at the Foundation, said: “These sensible reforms would raise revenue while doing the least possible harm to workers and the wider economy.”
He added: “By acting decisively, the Chancellor can turn her full attention back on to securing stronger economic growth.”
Mr Corlett warned the Treasury that the changes could also tackle long-standing “unfairness” in the tax system, helping to remove a bias against employees while raising more from wealthier individuals.
“These proposals would level the playing field, ensuring different forms of income are taxed more fairly,” he said.
The package of options includes extending employer National Insurance to cover limited liability partnerships, clamping down on unpaid small-business corporation tax, and introducing new levies on sugar, salt, carbon emissions from flights and shipping, and vehicle use.
The intervention comes weeks before Ms Reeves delivers her autumn Budget on November 26, as she faces a potential £40billion shortfall caused by welfare U-turns, higher borrowing costs, and an expected downgrade from the Office for Budget Responsibility.
A Treasury spokesperson said: “The Chancellor makes tax policy decisions at fiscal events. We do not comment on speculation around future changes to tax policy.”
