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IFS: Funding social care proposals may offer opportunity to rationalise tax system for older people

Raising revenue to pay for the proposals suggested by the Dilnot Commission on Funding of Care and Support offers an opportunity for the government to rationalise the tax and benefit system for those above State Pension Age, Paul Johnson, the director of the IFS, will say at a seminar on social care funding today.

The Dilnot Commission proposed changes which would involve a degree of co-payment between individuals and the state, and a much less harsh means-test on assets than in the current system. The proposals would cost money - £1.7 billion a year in the short term. The main beneficiaries of these changes would be pensioners with higher levels of income or significant assets. Dilnot therefore suggested that any tax rises or benefit cuts designed to pay for the proposals should be focussed on this group of better off pensioners.

In a new report funded by the Nuffield Foundation and published today, IFS researchers look at how pensioner incomes have evolved in recent years, how the tax and benefit system provides additional support for pensioners and how it could be reformed to raise additional revenue from this group. Any such changes would of course be painful, and may not be the best way to fund the Dilnot proposals; but money could be found whilst also making the tax and benefit system more coherent in the way it affects pensioners.

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