YOU’RE PAYING RECORD £718BN IN TAX...BUT FOR WHAT?
HARD-pressed Britons were taxed to the hilt last year but received poor value for money as public services creaked under pressure.
The Treasury collected a record £718.2billion, up by 23 per cent in just 12 months.
Boris Johnson yesterday lambasted the poorly performing state-funded agencies – threatening to privatise them.
The Prime Minister is now under mounting pressure to ease the burden on struggling families after the Treasury clawed in the record levels of taxes.
Income tax, National Insurance and capital gains hit a combined record high of £395billion.
The huge tax take comes at a time of major strains on public services.
Chancellor Rishi Sunak
‘It’s no surprise tax take reached a record’
pushed ahead with a £12billion a year 1.25 per cent hike in National Insurance this month to help clear Covid backlogs in the NHS.
But the problems are likely to continue for years.
Supply issues have left many women going through the menopause without access to hormonereplacement therapy.
Pharmacies are reporting problems sourcing other drugs on a daily basis.
A range of other state-funded services are also creaking after the pandemic.
Delays in the
Passport Office are so bad that
Mr Johnson has threatened to privatise it.
The Driver and Vehicle
Licensing
Agency has also been put on notice.
In his Spring Statement, the Chancellor promised the biggest cut to personal taxes in a quarter of a century under a plan to reform the system by 2024.
But campaigners have said it is time to end the “stealth tax” on income caused by a threshold freeze that came into force this month.
Danielle Boxall, media campaign manager at the TaxPayers’ Alliance, said: “It’s no surprise the tax take has reached a record high.
“With inflation rising, the Chancellor’s tax break freeze is effectively a stealth tax on unsuspecting taxpayers already facing the highest tax burden in 70 years.
“The Treasury should link thresholds with inflation or wage growth to avoid fiscal drag and give taxpayers and businesses some much-needed respite.”
In March 2021, Mr Sunak announced that income tax thresholds would be frozen from April this year until 2026.
It means more people will be dragged into paying the basic rate of tax as the trigger remains at £12,570 for the next four years.
The higher rate threshold will remain at £50,270 for the same period, tipping more earners into the high level.
But the Chancellor set out plans last month to reduce the basic rate of income tax by one per cent to 19 per cent from April 2024 – the first cut in 16 years.
Treasury insiders said the Government’s tax plan will reduce and reform taxes to help families with the cost of living, create the conditions for private sector-led growth and ensure the proceeds of growth are shared fairly.
Overall, tax receipts as a proportion of Gross Domestic Product hit more than 30 per cent after hovering at around 27 per cent over the previous two decades, according to the provisional HMRC figures.
Inheritance tax receipts increased by £6.1billion in the last tax year, which officials said was likely down to the pandemic and recent rises in asset values.
The strong tax take will give the Chancellor more room to act to tackle the cost-of-living crisis in his Autumn Budget.
James Smith, research director at the Resolution Foundation, said the record levels meant the Chancellor “can have little reason not to provide much-needed policy support to families as they deal with the higher inflation and energy bills that are now hitting their finances”.
Mr Sunak insisted he is focused on
securing the economic recovery in the wake of the pandemic while acting to ease the pressures families are facing as inflation pushes up everyday costs.
He said: “Thanks to the action we’ve taken, the economy is recovering and our public finances are improving, allowing us to invest in vital public services, help the hardest hit with a £22billion package of support and get people into work. Despite global economic headwinds, we continue to meet our fiscal rules, showing our commitment to keeping the public finances sustainable while supporting the UK’s long-term growth and addressing the immediate pressures facing people with their cost of living.”
Separate figures released yesterday showed Government borrowing dropped by half but still remained close to an all-time high as the fragile recovery continues.
The Government borrowed £151.8billion in the year to March, the third highest amount since 1947.
The figure is still less than half the £317.6billion borrowed in the previous 12 months, according to the Office for National Statistics.
TREASURY mandarins may be delighted they have raked in a bigger tax haul than ever before but taxpayers will demand real improvements in the quality of public services.
This is the people’s cash and the citizens of this country have every right to expect the Government to deliver exceptional value for their hard-earned money.
A record £718.2billion was collected in the last tax year, a rise of almost a quarter on the previous year. Hopefully, this will allow the Chancellor to take major strides towards addressing the debt burden amassed during the pandemic.
Patience with substandard public services – services that are, minister should remember, owned by the public and funded through our earnings – is wearing thin. Reports that Boris Johnson has threatened to privatise the Passport Office and DVLA unless they deliver bold improvements are welcome.
It is intolerable if families are forced to pay for a premium service, or have to cancel their holiday, because they cannot get a passport on time. Taxpayers’ incomes should not be raided to pay for failing bureaucracies if the private sector could deliver much better services at a fraction of the cost.
A Government should do much more than maximise the tax take. It must introduce the reforms Britain needs to thrive.