Jan 2012 30

Stephen Hester was right to turn down his bonus0

Last week I wrote about how it was wrong for Stephen Hester to be getting a bonus of nearly a million pounds, while taxpayers were still so far from getting their money back after the massive bailout.  Last night it was announced that he was going to turn the bonus down.  He deserves credit for that, but some commentators have pointed to a fall in the bank’s share price this morning and argued that taxpayers have lost out as a result of the decision.  The problem with their argument is that other British and European banks are down even more. Continue Reading

Windsor and Maidenhead cut Council Tax for the third year in a row
Jan 2012 30

Windsor and Maidenhead cut Council Tax for the third year in a row0

Last week Windsor and Maidenhead council announced they are cutting Council Tax for the third year in a row. There are several councils planning to ignore Government funding for a Council Tax freeze so that they can raise it. But Windsor and Maidenhead are cutting theirs by 1.5 per cent cut. This follows a 4 per cent cut in 2010 and a 0.5 per cent cut in 2011.

The proposal – if passed by the full council in February – ensures residents in Windsor and Maidenhead will pay the lowest Council Tax in the UK outside London. This means real savings for hard pressed taxpayers – for band D residents, Council Tax has fallen by £61 over the last 3 years. Continue Reading

Jan 2012 30

Lower and simpler taxes are part of combating tax evasion1

At the end of last week, I discussed tax evasion on the Radio 4 World Tonight programme with the host Ritula Shah and activist Richard Murphy.  Everyone should pay their fair share but, as I argued, condemning those who break the law is only part of the equation. We also need lower and simpler taxes which are easier to pay.

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Average family pays £656,000 in tax over their lifetime
Jan 2012 30

Average family pays £656,000 in tax over their lifetime4

As the deadline looms for UK taxpayers to file their paperwork with HMRC, the TaxPayers’ Alliance (TPA) can reveal that the average family pays £656,000 in tax over their lifetime. New research shows the total amount of direct and indirect tax that households will pay over their working lifetimes and in retirement. Based on the current level of taxes applying over a working lifetime of 40 years and 15 years of retirement the TPA has calculated the total taxes paid by households broken down by income.

Click here to see the breakdown of lifetime taxes paid by households of differing incomes

Click here to read the full press release

The key findings of this research are:

  • The average household will pay £656,000 in tax over their lifetime in direct and indirect taxes. This includes a total of £250,000 in Income Tax and £101,000 in VAT
  • An average household in the highest income quintile will pay over £1.3 million in direct and indirect taxes
  • An average household in the lowest income quintile will pay £235,000 in direct and indirect taxes
  • An average household in the second income quintile will pay over £392,000 in direct and indirect taxes
  • An average household in the third income quintile  will pay over £556,000 in direct and indirect taxes
  • An average household in the fourth income quintile  will pay over £755,000 in direct and indirect taxes
  • The four most burdensome individual taxes over a lifetime are Income Tax, VAT, employee National Insurance contributions and Council Tax
  • Poorest households are hit hardest by VAT and Council Tax. A household in the lowest quintile pays £57,000 in VAT and £55,000 in Council Tax over a lifetime

 

Click here to see the breakdown of lifetime taxes paid by households of differing incomes

Click here to read the full press release

Matthew Sinclair, Director TaxPayers’ Alliance said:

“Households in the UK now pay an incredible amount in tax over a lifetime, handing over a hefty slice of their income. The VAT hike has added to the cost of living and many taxpayers are really feeling the pinch with little prospect of improvement on the horizon. The Chancellor needs to deliver a tax cut in the Budget, to ease the burden and help the economy to grow. Simpler, fairer taxes can decrease the lifetime tax bill for households and leave everyone with more of their own money, so they can decide how to spend it.”

The average household is defined as having a gross annual income of £36,372 . Household income is broken down into five groups (quintiles) ranging from least to most income:

The average gross annual income of lowest quintile is £11,730
The average gross annual income of the second quintile is £19,133
The average gross annual income of the third quintile is £29,227
The average gross annual income of the fourth quintile is £41,886
The average gross annual income of highest quintile is £79,888

Clegg is right on the personal allowance – take the poorest out of tax
Jan 2012 27

Clegg is right on the personal allowance – take the poorest out of tax8

The Deputy Prime Minister, Nick Clegg, has said he thinks the Coalition should speed up the implementation of its pledge to increase the amount of money people can earn before they have to pay Income Tax (the ‘personal allowance’) to £10,000. The level is currently £7,475 and is scheduled to rise to £8,105 but Mr Clegg argued that poor families being squeezed by the VAT hike and tough economic conditions deserve a break from taxes sooner:

“Today I want to make clear that I want the coalition to go further and faster in delivering the full £10,000 allowance, because bluntly the pressure on family finances is reaching boiling point.”

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