Tax burden is at a 50-year high for struggling families
THE tax burden on British households and businesses has reached a 50-year high, analysis shows.
Britain’s tax bill has hit a new high of 34.6 per cent, smashing through the 34.3 per cent of gross domestic product (GDP) seen in the early Sixties, according to historical data analysed for The Sunday Telegraph by the TaxPayers’ Alliance. It was as low as 32.7 per cent as recently as 2015.
The alliance fears that Office for Budget Responsibility forecasts show that the Treasury wants to keep the tax take at this level for the next five years.
Last night former Cabinet ministers described the figures as “shocking” and an “embarrassment” for a Tory Government that was elected in part on a platform of bearing down on tax. The alliance said that cutting the tax burden to 29.9 per cent of GDP – levels last seen in the final year of John Major’s government in 1996-7 – would cut tax by nearly £100billion. The tax take was just 28.5 per cent in 1993-4.
In theory, that could be done by abolishing capital gains and inheritance tax, air passenger duty and stamp duty, halving national insurance and cutting income tax.
The campaign group said that while politicians often expressed concern about the cost of living, too few considered taking less money away from families and businesses by lowering taxes. It pointed out that recent
calls for new taxes on meat products, digital services, plastic and even coffee cups were examples of how the tax burden can inexorably creep up.
Priti Patel, a former Cabinet minister, said: “These shocking numbers... really bring home how high our taxes have gone up. It’s an embarrassment to this or any government to take so much money from hard-working taxpayers.
“Lower taxes promote economic freedom which leads to more growth, more jobs and more money in people’s pockets. That is the only and the Conservative way forward.”
Owen Paterson, another former Tory Cabinet minister, said: “These figures are shocking. High taxes slow economic growth.”
Evidence has suggested reducing tax rates can bring in more revenue. A cut in corporation tax from 28 per cent in 2010-11 to 19 per cent this year is estimated to have increased tax receipts by 25 per cent. Income tax receipts from the additional 45p rate increased by 37 per cent in real terms after the rate came down from 50 per cent in 2010-11 to 45 per cent in 2013-14
John O’Connell, the chief executive of the TaxPayers’ Alliance, said: “For all the talk of increasing taxes to help the poorest the truth is that the steady increase of the tax burden often hits precisely those families the hardest.
“Other countries like the US and Australia are cutting taxes and we should look to replicate that to boost the economy and ease the burden on the most hard-up taxpayers.”
A Treasury spokesman said: “Since 2010 the Government has continued to increase personal allowance meaning that 32 million individuals will now see their income tax bill reduced next year. We are helping families by freezing fuel duty, increasing the national living wage to £8.21 and cutting corporation tax to help over a million businesses.”