POLITICS

Poorest Households Pay More In Taxes Than The Richest 10%, New Figures Reveal

Indirect taxes clobber the less well off

25/04/2017 12:50 BST | Updated 25/04/2017 12:52 BST
Rosemary Calvert via Getty Images

Britain’s poorest households pay more of their incomes in taxes than the very richest, official figures reveal today.

The latest release from the Office for National Statistics shows the poorest 10% of households fork out 42% of their income in taxes – including VAT and council tax.

Conversely, the richest 10% pay 34.3% - according to analysis by the Equality Trust.

Today’s figures also show that average income for the richest fifth of households is £84,700 – more than 12 times greater than the poorest fifth (£7,200).

Theresa May last week refused to rule out raising VAT – currently 20% - if the Tories win the General Election.

Dr. Wanda Wyporska, Executive Director of The Equality Trust, said: “When the super-rich are paying less in taxes than their cleaners, you know something has gone disastrously wrong with our broken, regressive tax system.   

“Time after time we see sensible reforms attacked and rejected in favour of tax cuts for billionaires. These do nothing for ordinary people struggling to keep a roof over their head. 

“If political parties are serious about representing working people, they need to shift the burden of tax to those with the broadest shoulders. Only then will we see a fairer and more equal society.” 

Council tax and VAT are the two payments that hit the lowest earners particularly hard, according to Equality Trust analysis of the figures.

The poorest 10% of households pay 7% of their gross income in council tax, compared to just 1.5% for the richest,

When it comes to VAT, the poorest households fork out 12.5% of their gross income – whereas that tax only accounts for 5% of outgoings for the richest.

ONS

Today’s ONS figures also show that more than half of UK homes – 50.5% - received more in benefits than they paid in taxes.

However, when pensioners were removed from the statistics, it is just 37.2% of households.

Commenting on the release, Lib Dem Shadow Chancellor Susan Kramer said: “These figures show starkly how unequal our society is and how we must do more to help some of the poorest in society.

“The government seems intent on doubling down on trickle-down economics and instead of giving people a helping hand, they give the poorest the brush off.  This out of touch government just don’t care.

“This divisive Conservative Brexit government know that you cannot have a more equal society with a hard Brexit.”

The ONS also today published its latest update of public sector finances.

The deficit - the difference between what the Government spends and the revenue raised by the Treasury - had fallen by £20billion to £52billion in the year to March 2017.

That means the deficit is now at its lowest level since March 2008

The national debt has gone up £123.5billion - putting the UK’s total debt at £1,729.5billion. 

ONS

Labour’s Shadow Chancellor John McDonnell said: “The Tories promised when they were first elected that they would have balanced the books by 2015, but now they cannot promise to do it by 2020, and instead the past year has seen both borrowing and debt has increased.

“Today’s figures reveal that the national debt has gone up by £123 billion since March last year, and with a Tory Chancellor who won’t rule out raising taxes on low and middle earners, and has no plan to deal with inflation rising ahead of earnings, it is clear the Tories want the rest of us to pay for their mistakes.”