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
“So if someone manages to squirrel away £10 a week of benefits to save for a new TV, that’s suddenly wrong?”
It means they’re getting £10 a week more than they need. A TV is a luxury. If you want one, earn the money.
Fergus Mason
“They are not luxuries.”
Oh grow up. They’re luxuries. Nobody needs a TV.
the state of the economy and cost of living means they cannot afford ot breath air.”
Hyperbolic shite. This is why nobody takes the left seriously any more.
Fergus Mason
If the top quintile is getting seven times as much before tax, and four times as much after tax, they would appear to be paying more than their fair share.
Matt Booth
This is pretty fucking disgusting, to honest. Why are you even here?
Fergus Mason
“This is pretty fucking disgusting”
Why? Don’t you think it’s MORE disgusting to say that people have a right to consumer electronics and other luxuries paid for by someone else?