20 Years a Slave: UK Taxes

Figures from the TaxPayers' Alliance reveal the extent of the burden of taxation in the UK, with the average household having to work for over 20 years just to cover the tax bill. 

 

It is a topic rarely addressed in the quasi-socialist political environment of the UK but now and then the chance to demonstrate to voters how the cost of living is ratcheted up by a pervasive and complex tax code arises. And this is what the TaxPayers' Alliance has attempted to do with data from the ONS, detailing how the tax burden on different households has grown in the last 20 years.

The Alliance, which frequently calls for the government to tighten its belt in order to make significant reductions in taxation, found that at the 2014-2015 rate of tax the average household in the UK would pay  £826,030 over a working lifetime of 44 years (from 21 to 65) and 15 years of retirement. The TPA calculated that to pay off this bill alone the average household would have to work for over 20 years but, the poorer you are, the worse the picture gets for you. 

An average household in the bottom 20% of income with a gross income of only   £13,841 per year faces a lifetime tax bill of  £312,973 and has to work for 23 years, an above-average length of time, to cover its tax bill. The picture looks slightly rosier for households in the top 20% but not much as the average household in that quintile faces a lifetime tax bill of £1,686,970 and still needs to work for 19 years in order to cover its tax bill, only 4 years below the poorest households and 1 year below the UK average. 

These figures amply demonstrate how taxation can indeed undermine the incentive to work, especially among less skilled labourers and the insidious, ever-expanding nature of taxation is clear to see. In the 1994-95 financial year, the lifetime tax an average household could expect to pay was  £427,980 but in 2014-15, that figure had grown to  £826,030, an increase of almost  100%. In the case of the bottom 20% of households, the expected life tax bill has increased in the aforementioned period from  £158,881 to  £319,732, an increase of over 100%. 

Interestingly, despite it being a popular line to take among Tory-bashing leftists, the suggestion that the well-off are being spoiled in their taxation by the Conservative government, the biggest tax increase year-on-year between 2013-2014 and 2014-2015 was faced by the top 20% of UK households with them facing a 4.3% increase in their expected lifetime tax bill as opposed to a 2.7% increase for the average household and a 2.2% increase for the bottom 20%.

The figures give a troubling glimpse into the impact of taxation on the ordinary working man and woman in the UK but don't expect them to be given too much coverage by the press or parties after the summer recess. 

You can find the link the link to the TPA's findings here:   https://d3n8a8pro7vhmx.cloudfront.net/taxpayersalliance/pages/6761/attachments/original/1472132879/Lifetime_tax.pdf?1472132879