Cuts to tax credits will make things even worse for the poorest households
New data from the Office for National Statistics (ONS) has confirmed that the richest people in the UK are contributing a lower share of income tax than the poorest.
In its latest statistical bulletin looking into the effects of taxes and benefits on household income (for the financial year ending 2014), the ONS finds that the richest and poorest fifth pay 34.8 per cent and 37.8 per cent of their gross income respectively.
The richest fifth of households paid £29,200 in taxes (direct and indirect) compared with £4,900 for the poorest fifth.
This is despite the fact that, before taxes and benefits, the richest fifth of households had an average income 15 times greater than that of the poorest fifth.
After taxes and benefits are taken into account, the ratio between top and bottom was reduced to four-to-one, leading the ONS to note the importance of benefits and tax credits in rebalancing the top and bottom sections:
“The overall impact of taxes and benefits are that they lead to income being shared more equally between households…
“The distribution of cash benefits between richer and poorer households has the effect of reducing inequality of income.
“After cash benefits were taken into account, the richest fifth had an average income that was roughly six and a half times the poorest fifth (gross incomes of £83,800 per year compared with £12,900, respectively).”
The Tories’ planned cuts to tax credits could make up as much as £5bn of the planned £12bn cut to welfare. As well as helping to reduce inequality, tax credits have been hailed as a driving force in reducing child poverty.
Ruby Stockham is a staff writer at Left Foot Forward. Follow her on Twitter
82 Responses to “Richest are paying lower proportion of income tax than poorest, says ONS”
Matt Booth
You’ve been arguing the toss with me about benefits and ignoring my comparisons to people on tax credits who work but still need benefits! Not being dishonest at all, I was asking if you were agreeing to that statement, since I suggested it and you didn’t contest!
Fergus Mason
“there are MILLIONS of people on benefits who work hard as nails and still cannot earn enough to get by.”
That’s a fact of life. What you earn is, generally speaking, a function of what skills you have. If you don’t have valuable skills you’re not going to earn very much, which means you can’t expect to have all the things that people who DO have valuable skills can afford.
Matt Booth
Yeah, so millions of people should sit in the dark and not be able to drain a modicum of enjoyment out of life because you want to be a cunt.
Of course, everyone can afford a day off work to go to the local college and look at courses to better themselves. Everyone can afford a day off work to go to the job centre and look for better paid work….
Unless they had a laptop and the internet, then they can do that at 3am in their underpants on a saturday night.
Fergus Mason
“so millions of people should sit in the dark”
Making shit up again, I see. Where did I say that? Oh, that would be nowhere.
“and not be able to drain a modicum of enjoyment out of life”
They can have as much enjoyment as they like. There are plenty of ways to enjoy yourself that don’t involve spending someone else’s money. The library, for example. Go for a walk in a park. Make a model of Notre Dame from crispy pancake boxes. So why should people demand the right to forms of enjoyment that they can’t afford? If you want a TV earn enough to pay for it.
Matt Booth
You have no idea how unbelievable you sound. You’re old fashioned and stuck in your ways. Think yourself lucky you’ll be dead by the time my generation comes to power 🙂
By the way, libraries aren’t free any more. Tory cut backs. And those crispy pancakes will have been paid for by money ripped from your very breast. Oh the fucking horror of it all.
Why are you content with ignoring the fact that people on benefits cannot simply work harder to become “not poor any more”? Time and time over you’ve ignored this. People on tax credits can’t just unpoor themselves through the magic of working more.
One of TWO things needs to happen!
1) Tax credits
2) The government needs to stop letting businesses off with relying on the government paying tax credits to top up peoples earnings in line with inflation and the cost of living.