Blair denies the truth on tax
Listening to Prime Minister’s Question Time prior to Gordon Brown’s Budget speech I heard Ming Campbell, leader of the Liberal Democrats aim a first rate question at Tony Blair. He asked (and I paraphrase):
How can the prime Minister be happy with the taxation record of his Party over the last ten years when the poorest in the UK pay a higher rate of tax than the richest? How can that be just?
And what did Blair say? He said:
That’s not true. The poorest do not pay tax in this country.
It’s staggering that after 10 years on office he doesn’t realise that what he said is wrong and that Ming Campbell is absolutely right. The data is here - published in Parliament. The lowest decile pay 42.6% of their income in tax. Their average income is £8,376 The highest decile pay just 34.9%, less than the fifth to ninth deciles it should be noted. Their average income is £84,357.
What a legacy for a Labour Prime Minister.
You’re not half as worried as I am about this discovery Tim
I don’t know whether you can look at taxation without looking at government spending. Incomes in the bottom quintile (decile data is not available) are more than double what they would have been without the tax and benefit system (see p.2 and p.3). In that case net tax paid is clearly negative.
Part of the explanation for taxes being a higher proportion of income is that expenditure is much higher than income, in fact (see p.8) this increases the share of taxation for the poorest quintile by 9 percentage points. To the extent that this is very poor people dipping into savings or borrowings, clearly it’s a problem, if it reflects more temporary poverty (students/self employed/etc) perhaps less so. But to a degree it’s unavoidable if you have indirect taxation, particularly if it’s very heavy on things like cigarettes (also on p.8)
http://www.statistics.gov.uk/articles/nojournal/taxesbenefits200304/taxesbenefits200304.pdf