As economies transition to increasingly digitalised and asset-heavy structures, traditional revenue streams such as Corporation Tax and fuel duties face structural decline. Economists and policymakers have proposed several alternative taxation mechanisms to stabilise public finances:
- Introducing a Land Value Tax (LVT): Replacing local business rates and council taxes with an annual tax on the unimproved value of land. Proponents argue LVT is non-distortionary and could raise up to £15 £15\,£15 billion annually, though landowners warn it could cause liquidity issues for asset-rich, cash-poor citizens.
- Implementing a progressive Wealth Tax: An annual 1% levy on net household wealth exceeding £5 £5\,£5 million. Supporters estimate this would target the wealthiest 0.5% of households and generate approximately £12 £12\,£12 billion a year, but critics highlight risks of capital flight and the administrative complexity of valuing illiquid assets.
- Expanding the Digital Services Tax (DST): Raising the rate of DST on multinational tech companies from 2% to 6% of revenues derived from UK users. This is projected to raise an additional £3.5 £3.5\,£3.5 billion annually, though it risks retaliatory tariffs from trade partners and potential double-taxation issues.
