Two charts that shatter Labour’s myths about fairness in taxation
Britain’s tax system is notoriously complex. It spews out a mass of data which, with a little ingenuity, can be cut in a number of ways to support a range of claims.
With the Budget now days away and Jeremy Corbyn and John McDonnell, the shadow chancellor, sharpening the focus of their attacks around the issues of fairness, let’s go back to the bare facts about who pays what in tax – and how that has changed in recent years. wholesale removal of tax benefits from higher earners.
From 2010, those who earned more than £100,000 started to lose the benefit of their personal allowance (more on that to come).
A greater proportion of their overall income was therefore taxable, pushing up their effective tax rate.
From April 2016, higher earners (those on £150,000 or more) also started to lose the ability to claim tax relief on pension contributions. Separately, the total amount that can be built up within a pension has been cut by 44pc since 2010, again affecting only the well off.
A succession of property-related tax changes – from stamp duty to the removal of mortgage interest tax relief – also flooded in. Stamp duty, hated though it is in most quarters, is paid disproportionately by Londoners and the rich.
Dividend taxation was increased for wealthy individuals with large shareholdings. And the list could go on. The top graph shows how much the richest now contribute to the total tax pot of Britain against the contribution of the bottom
The uppermost 1pc of earners now contribute almost 30pc of tax. The average-to-lower earners contribute a dwindling portion. The graph does not prove, of course, that tax policies themselves account for this larger contribution by the wealthy: it could be a function of their increased
It is a plain fact that the ‘rich elite’ are paying more into the system than ever