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
That’s gross income, not actual income. More misleading figures.
blarg1987
I doubt anyone is against inequality, but, if people do not have the tools to better themselves, be it working long hours and so are unable to obtain better skill sets due to working those hours to live. Then they are in essence forced in a cycle which they can not get out off.
Now would you class helping them as social engineering or
Fergus Mason
Helping them develop skills would be justified. Helping them afford a lifestyle they can’t earn for themselves isn’t.
Matt Booth
So low-wage people are to not have the same creature comforts as the rest of us? They are to sit around in the dark in their hovel houses because richer people feel more entitled to their “hard earned” money than the rest of us?
What a sack of tripe.
Yes, people with low skill receive lower pay. I have skills that a brick layer, or shop assistant doesn’t have (and I’ve at least been a shop assistant before) and I should be fairly compensated for my labour and skills. They weren’t free to acquire.
But that doesn’t mean the poorer section of society should be living on rations.
The cost of living in society includes “beer money and a TV”. Like or not, that’s the fact. Hell, the internet is soon to become a basic human right.
If a single mother works hard to raise her family and keep a roof above her head, but her minimum wage doesn’t cover even rent, let alone food, bills, clothes and the rest, then she needs child benefit and tax credits, council tax credit and all the rest. She NEEDS those. Her children need those.
We live in a civilised society, I can afford to pay my taxes so that others can have a fighting chance. I was once on a low income. I was once in receipt of benefits. If my paying taxes helps others, then so be it.
Matt Booth
You’re a confused and muddled person. So if someone manages to squirrel away £10 a week of benefits to save for a new TV, that’s suddenly wrong?