The tax scandal
Poor pay most
THE POOR pay a far greater rate of tax than the rich. That is the truth about tax according to a new study by the ultra-moderate Fabian Society. It found that over the last 20 years the tax burden has increased for the lowest paid fifth of the population, while the rich are paying less. The tax the top fifth of households pay has fallen from 37 percent of their income 20 years ago to 35 percent today.
Meanwhile the tax the poorest fifth of households have to shell out has risen from 31 to 38 percent. The main reason, says the Fabian Society, is successive governments' shift from direct taxes, which hit the rich, to indirect taxes, such as VAT, which mainly squeeze the poor.
The report slams New Labour for adopting the same stance as the Tories over tax. It says that if the government raised the top rate of tax for those on more than �110,000 a year to merely 50 percent it would bring in an extra �3 billion a year.
If the government raised Britain's taxes to the average European level it would raise an extra �40 billion a year. "You only need to look around our collapsing public services to see the result of this lost revenue," says the Fabian Society's Michael Jacobs. The vast majority of people would rather see increased public spending than tax cuts, says the report.
Some 80 percent of those polled wanted a 1p tax rise in return for more spending on the NHS. Only 16 percent favoured tax cuts.