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

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Published: 2026-09-01T23:11:42.387Z • Permanent link

The Resolution Foundation, a UK-based think tank, has urged Chancellor John Healey to consider increasing taxes on middle earners to fund the country's ambitious defence spending plans. The think tank's latest report highlights the need for the government to address the UK's relatively low 'tax wedge', the difference between the tax rates levied on employees and the tax rates paid by employers, to pay for its defence ambitions. The Resolution Foundation argues that the UK's tax system is one of the most generous in the world, with a tax wedge that is significantly lower than other developed economies. According to the think tank, the UK's tax wedge is currently around 13%, compared to an average of 23% in other developed economies.

The Resolution Foundation's call to action comes as the UK government prepares to unveil its latest budget, which is expected to include significant increases in defence spending. The think tank's report highlights the need for the government to consider alternative sources of funding, such as increasing taxes on middle earners, in order to avoid placing an unsustainable burden on taxpayers. The report also notes that the UK's defence spending plans are likely to be influenced by the government's ambition to increase the size of the armed forces, as well as the country's desire to maintain its international influence.

The Resolution Foundation's report is likely to be closely watched by policymakers and defence experts, who will be interested in the think tank's assessment of the UK's defence spending plans and the potential implications for the country's economy. The report's call to action is also likely to spark debate among politicians and commentators, who will be weighing in on the merits of increasing taxes on middle earners to fund defence spending.

The Resolution Foundation's call to action is likely to have significant implications for the UK's economy, particularly for middle earners who will be affected by any increase in taxes. The think tank's report highlights the need for the government to consider alternative sources of funding for defence spending, which could have a major impact on the country's fiscal policy. The report's assessment of the UK's tax wedge and its implications for defence spending is likely to be closely studied by researchers and policymakers, who will be interested in the think tank's analysis of the data.

The Resolution Foundation's report is also likely to have significant implications for the UK's defence industry, which will be watching with interest as the government announces its latest defence spending plans. The report's call to action is likely to spark debate among defence experts and politicians, who will be weighing in on the merits of increasing taxes on middle earners to fund defence spending. The report's assessment of the UK's defence spending plans and the potential implications for the country's economy is likely to be closely studied by researchers and policymakers.

The Resolution Foundation's call to action is part of a broader pattern of debate around defence spending and taxation in the UK. The government's decision to increase defence spending is likely to be influenced by a range of factors, including the country's desire to maintain its international influence and its ambition to increase the size of the armed forces. The UK's defence spending plans are also likely to be influenced by the country's economic situation, including the impact of the COVID-19 pandemic on the economy and the impact of Brexit on trade and investment.