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”
Fergus Mason
Compulsory health insurance, like most of Europe does. That also gets rid of a monolithic and inefficient health service by introducing real competition; if a German hospital is dirty and inefficient, patients won’t go there. The result is that German hospitals are well run and spotless.
blarg1987
And our private health care provision, which is exempt from providing evidence that could have affected a patients outcome if they suffered some form of complications is a shining example?
All systems have problems, choice comes with either additional costs whereby we have to pay for several hospitals to have staff twiddling their thumbs waiting for the consumer to arrive, or a reduced service provision, whereby, there will be sod all staff in if a major incident occurs.
Matt Booth
They collect taxes from people who live and earn a living in this country. They enjoy the protection of the state in all the ways it provides it, and as such, pay taxes.
If you want to pay little tax and keep all your heard earned money, move to Somalia. If you want to live in a civilised country among civilised people, then you must pay taxes to maintain the upkeep.
Furthermore, your argument seems to be that if you want luxuries you must work for them. But what about the people existing within the wage poverty? Those who work full time in jobs that do not pay enough for them to even exist? Benefits paid to the work less and feckless are an absolutely minimum of the overall welfare budget. Most of it is taken by Tax Credits. People who work hard and still cannot seem to make ends meet, and weren’t born with a silver spoon in their mouth.
So the government has three choices.
1) Starve the poor
2) Pay tax credits from tax money
3) Force businesses to pay a living wage that means people don’t need tax credits at all (and can still survive and have “luxuries”).
1) Not going to happen. Who would sweep the streets and serve your groceries?
2) Already happening
3) Government too interlocked with businesses, plus people like you would cry foul that the government is dictating to honest hard working business people how to run their businesses.
So, on the contrary, it is absolutely the job of the government to make sure people have a roof over their head and food in their stomach by removing the proverbial foot on their head and letting them get their head above water.
Matt Booth
http://i.guim.co.uk/img/static/sys-images/Money/Pix/gallery/2014/3/25/1395752138824/income-figures-treasury-009.jpg?w=620&q=85&auto=format&sharp=10&s=ccb9591560209a5a9b7889034fa309c0
Apparently not.
Fergus Mason
“it is absolutely the job of the government to make sure people have a roof over their head and food in their stomach”
Yes it is. But it’s NOT the government’s job to make sure everyone has beer money and a TV. If you’re low-skilled or unqualified you’re never going to earn as much as someone with more marketable skills. There’s nothing unfair about that. A wage is payment for the value of the labour you provide, and if you’re unskilled your labour simply isn’t worth very much. Wage inequality is not an evil that needs to be eradicated; it’s what keeps us from collapsing into a mess like the late and unlamented Soviet Union, where nobody gave a shit about doing their job properly.