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
How the fuck is that misleading? That’s their income before tax.
Fergus Mason
“So low-wage people are to not have the same creature comforts as the rest of us?”
Er, no. I should have thought that was obvious. The state should provide the essentials where necessary. It should NOT provide luxuries.
The cost of living in society includes “beer money and a TV”.”
No. Those are luxuries. If you want them, earn them.
Fergus Mason
It’s not what they actually get though, is it?
Matt Booth
So? The point of the article is how much they get and how much they pay in tax. So, gross income is valid here.
Matt Booth
They are not luxuries. Neither is expensive nor difficult to obtain. They are also part of society.
But this just ignores the fact that you think that poor people can choose not to be poor, and that’s the crux of the matter. You’re very “why don’t they eat cake” about this sort of thing. Poor people on tax credits aren’t simply “not trying”. They are trying, and the state of the economy and cost of living means they cannot afford ot breath air.
If you’re going to tell people that they have to work their arses off barely earn enough to keep the lights on, that they can’t have Beer and TV, you’re going to start a riot.