Fund defence spending from tax rise on middle earners, thinktank tells Healey

A leading UK thinktank has warned that the country’s historically low tax burden on workers—known as the "tax wedge"—may need to increase to finance planned defence spending hikes. The Resolution Foundation argues that middle-income earners could face higher taxes to bridge the funding gap, a proposal that comes amid ongoing political divisions over defence priorities. The call follows a recent resignation from the government by a senior finance official who had criticized insufficient defence investment. The debate highlights tensions between fiscal constraints and national security ambitions.

Resolution Foundation argues that UK’s internationally low ‘tax wedge’ must rise to pay for defence ambitionsThe chancellor, John Healey, must be prepared to raise taxes for middle earners if he wants to fund significantly higher defence spending, the Resolution Foundation thinktank has said.Healey resigned from Keir Starmer’s government in June, protesting against what he argued was the then prime minister’s failure to adequately fund defence. Continue reading...