Snippets about Tax in the UK

 

The tax burden is at its highest sustained level in more than seventy years. An ageing population and consequent need for more spending on health, social care and pensions, means that, whatever the politicians may tell you, there will be more tax rises, if not soon then certainly within the decade.

In the UK we are around average in the developed world in terms of the size of our state. We tax and spend rather less than most of our Western European neighbours but rather more than the US, Canada and other non-European members of the OECD... There is nothing in economics which says we can't have a bigger state. France, Germany, Sweden and the Netherlands are all successful economies which raise a lot more in tax than we do, and spend a lot more as well. What we can't have are American levels of tax and European levels of public spending...

We have to make choices. If we want better public services we will have to raise more in tax. If we want to cut tax we have to be honest about which parts of the welfare state we are happy to spend less on. There are no short cuts, no easy answers. Those who claim there are, are taking us for fools... 

Now, as then, we get most (nearly two thirds) of our revenue from just three taxes - income tax, VAT and National Insurance contributions...

Rabbits
Samuel John Carter (1835-1892)
Photo Credit: Southwark Art Collection [CC BY-NC]  

My second favourite piece of VAT guidance also concerns animals. It is advice on what animals and animal food are subject to VAT. Honeybees are not VATable, bumble bees are. If you want a pet get a rabbit. Most pets are subject to VAT. Because rabbits are edible, they are not...

Around four in ten adults - more than 20 million of us,... have personal incomes of less than £12,570...

We are now in the remarkable position whereby the top 1 per cent of income taxpayers contribute 30 per cent of all income tax. That top 1 per cent, those with incomes over around £190,000, tend to be male, middle aged, and living in and around London...

Given how many don't pay income tax at all that means that 90 per cent of income tax is paid by just a third of the population...

The dominance of our financial sector is one reason that inequality in the UK is higher than in most comparable countries...

For it is not the case that those countries, in Western Europe (especially), which have higher taxes and spending than we do, raise those taxes from the rich or companies or 'someone else'. They raise them by having higher taxes on average earners.

(Paul Johnson Follow the Money 2023)

Paul Johnson is a UK economist who is head of the "think tank" called the Institute for Fiscal Studies. (IFS) It is widely respected as being an independent body not like many other "think tanks" that have definite political leanings. The Institute's research is meant to inform policy makers (Politicians, Civil Servants etc)  and those to whom they are accountable. (The Electorate) 

Johnson's latest book, Follow the Money, is not officially endorsed by the Institute but you can be assured, as Johnson makes known in his introduction, that some of his fellow members have in their own way made very useful contributions.