Poorest UK households pay almost half their income in tax – Guardian


Following on from the series of articles on how the Conservative-led Coalition Government is slowly disenfranchising the poorest UK citizens – basically, if you don’t pay Income Tax, they don’t have to listen to you – here’s another angle: The fact that the poorest are still paying huge amounts of indirect taxes.

According to The Guardian: The poorest 10% of households pay almost half of their gross income in tax, analysis by a campaign group claims.

The TaxPayers’ Alliance research found that direct and indirect taxes accounted for an average of 47% of the gross income of the poorest decile, with VAT accounting for the biggest share of the bill.

The analysis of Office for National Statistics figures showed average gross income, including benefits, in the group was £9,743, but after tax it was £5,132.

The figures for 2012-13 showed that for the poorest 10%, 13.9% of their gross income went on VAT, 7.2% on council tax and 5.6% on alcohol or tobacco duties.

The wealthiest 10% of households paid an average of 35% of their gross income in taxes, £37,287 a year, with income tax accounting for 19.1%.

Now, the TaxPayers’ Alliance is a sub-UKIP gang of selfish rich kids who couldn’t really care less for anyone but themselves. They’re pretty much the ‘right-wing libertarians’ mentioned by Martin Odoni in his recent article on taxation. He believes “their obsession with money means they have trouble seeing the difference between keeping money and actually being free, thus making their outlook little advanced from that of the feudal barons of the Middle Ages. It is a simplistic, obsolete position, taken by people who do not see where freedom ultimately comes from or most of the qualities it embodies.”

Undoubtedly they wanted to whine about the amount taken from the wealthiest households. But these are households paying Income Tax; take that away and the proportion of their income paid in the same taxes as the poorest people is just 15.9 per cent. Big difference!

TPA spokesman Jonathan Isaby said: “Not only does the tax system hit the poorest hardest, but those at the top are already contributing far more than anybody could reasonably describe as their ‘fair share’. Our tax system is neither progressive nor fair, and we need radical reform as well as necessary savings if the way we tax and spend is to become fit for purpose.”

See? He’s after tax cuts for the rich.

The Treasury has responded with this: “In 2015-16 the 20% of households with the lowest incomes will receive almost five times as much support from spending on public services and welfare as they contribute in tax. But the government also realises that the effects of the great recession are still being felt, which is why we have taken continued action to help, including by lifting 2.95 million out of paying income tax altogether.”

Again, that’s not the point. What we need is for the poorest to be earning a living wage, from which they may pay their fair share in Income Tax, on the kind of progressive scale you’ll never see under a Conservative government, or advocated by the TaxPayers’ Alliance.

Then we might see some fairness creeping into the system, as people from across the earnings scale begin to receive the same representation and respect.

Follow me on Twitter: @MidWalesMike

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4 thoughts on “Poorest UK households pay almost half their income in tax – Guardian

  1. maria

    We do need a reform, we need to make tax fairer and make the rich do their duty and pay all their taxes, how can the rich have a tax cut when they don’t pay their full taxes anyway?

  2. Nicholas Blanch

    Interestingly, Mike, the Telegraph spun this study and the same quote from Isaby in a very different way, arguing that the numbers indicated that people in the lowest 4 income deciles were being unfairly penalised by high levels of VAT. The article argued for a relaxation on this and other general sales taxes like fuel duty while increasing rates of income tax in the higher brackets and so-called ‘sin’ taxes like the duties on tobacco and alcohol. I think you’ll agree that that’s a much more sensible outlook, and I personally wouldn’t mind someone taking another look at capital gains tax since payment in stock options is one of the most well-known income tax dodges out there for top level corporate executives.

    1. Mike Sivier Post author

      It won’t happen with the current crop of Conservatives because VAT is more or less keeping the Treasury going at the moment.

  3. Stevo

    In the early 90’s i figured up all the taxes and fees my wife and I paid and it was over 50% of our gross income total. God only knows how much higher it is now as we pay taxes on things now we did not back then, utility bills for instance.

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