Richard Exell at the TUC has produced a first rate blog including a great deal of data on the way the UK tax system is working at present. It's available here and I strongly recommend it.
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What is particularly striking is how regressive council tax is. Disgusting that it is 7% for the lowest decile and only 1.5% for the upper. It makes me sick that someone non-resident can have a second home in London worth millions and only pay a few thousands in council tax.
But also how is it possible that at the lowest decile, indirect taxes are 41.2% of disposable income. Given food and rent are VAT free, and Vat is only 20%, the remainder must be taken up by a significant amount of spending on fuel or alcohol/cigarettes, otherwise I can’t see how it gets there? Looking at the report, it says the lowest quintile indirect taxes are 31% of disposable income, but then it says they are 21% of expenditure, so seems to be implying they spend more than their disposable income?
There is a difficulty in defining income of the lowest decile – is it pre or post benefits, and which beenfits at that? This produces, I admit, aberrational results
“Disgusting that it [council tax] is 7% for the lowest decile and only 1.5% for the upper.”.
No wonder the Tories were anxious to abolish the old domestic rating system which was much more progressive. They tried to replace it with the terrible Poll Tax and it was quite amazing how that was defeated by active campaigning. However, Council Tax is not a lot better and it had to be sweetened by collecting less overall, subsidised by an increase of 2.5% in the VAT rate (one of the most regressive taxes of all).