Rich are paying more tax than they did in the Seventies
THE tax burden shouldered by Britain’s wealthiest has more than doubled since the 1970s, analysis of historic data reveals – further undermining the Conservatives’ reputation as a low-tax party.
Analysis by The Daily Telegraph of nearly four decades of tax and income records shows high earners are now responsible for paying a higher proportion of Britain’s total income tax bill than they ever did under any Labour government.
Today the top 1 per cent of income-tax payers, who earn more than £162,000 a year, pay more than a quarter (27 per cent) of all income tax.
In comparison, under James Callaghan’s notoriously “high tax” Labour government in 1976, the top 1 per cent paid just 11 per cent of total income tax receipts.
Following Philip Hammond’s Budget decision to raise National Insurance contributions for the selfemployed – since reversed – a poll revealed that most people no longer consider the Conservatives a party of low tax.
In addition today’s top 10 per cent of taxpayers, who earn over £51,400, are paying a good deal more towards the UK’s total tax take than the wealthiest decile did in the Seventies.
Collectively they now pay 59 per cent of total income tax, up from 35 per cent in 1976. The analysis also found taxes on top earners are higher than they were during Gordon Brown’s Labour government in 2007.
It confirms that under Theresa May, both groups are making a bigger
contribution to the UK’s total incometax receipts than they have done at any time since the war.
Taxes have crept up as the Government continues to make “difficult decisions” about how to reduce the deficit, and fund and invest in public services, including the NHS and social care.
The analysis comes after just one in four voters in a poll for this newspaper said they now regarded the Tories as a low-tax party, while almost half saying they trust the Tories less as a result of Mr Hammond’s recent Budget.
Just last week the Prime Minister and her Chancellor were forced to abandon the increase in National Insurance contributions for self-employed people after a rebellion from their own MPs.
Last night Conservative politicians criticised the current tax system and warned that the tax burden on the wealthy had reached a point where it was in danger of damaging the economy.
Lord Lamont of Lerwick, who served as Conservative chancellor in the early Nineties, warned that the tax burden on the wealthiest is too high.
He said: “We have succeeded in attracting a lot of high-net worth individuals and that should be applauded.
“[But] It would be wrong to think you can always rely on someone else to pay taxes. Robbing Peter to pay Paul, Paul will always vote for that but it won’t always work.
“I’m not a great fan of ever increasing the personal tax allowance because everyone should pay some tax.”
Andrew Bridgen, a Conservative MP, warned taxes on the wealthy were at the point where any further increase could threaten their productivity.
He said: “Tax should never be a punishment for the wealthy. The higher you raise tax, the less money you get in. I think we have reached that point. If we put the top rate of tax back to 40 per cent [from 45 per cent] we would raise more revenue because people would be more encouraged to be productive.”
In 1974 the top rate of tax was raised to 83 per cent by Denis Healey, as part of a tax regime which he famously said would “make the pips squeak”, in a desperate bid to boost the failing economy.
Between 1974 and 1979, there was also an investment income-tax surcharge of 15 per cent which pushed the top rate up to 98 per cent for some taxpayers.
A Treasury spokesman said: “Our reforms to the tax system mean hardworking people are keeping more of what they earn. Increases to the personal allowance will take millions of people out of income tax altogether.”
‘Tax should never be a punishment. The higher you raise tax, the less money you get in. I think we have reached that point’