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Packhorse Generation: The new tax burdens forced onto young people by inflation

This report investigates how the government has got around a manifesto promise not to raise taxes. The paper explains how the government has instead introduced taxation by stealth which is falling largely on younger people. It explains how younger generations are being stung by a combination of:

  • Fiscal drag
  • The freezing of income tax thresholds
  • A 10% increase in National Insurance Contributions (NICs)
  • The freezing of the student loan repayment threshold

The paper concludes that young people are being unfairly targeted for COVID-19 spending and the government’s promises to reduce NHS waiting lists and address social care. Instead, an intergenerationally fairer form of taxation should be introduced starting with an alignment in NICs between younger workers and those who continue to work post-State Pension Age and the taxation of unearned income which would fall more fairly on older, wealthier generations.