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14.08.15

Poorest hit the hardest by ‘pernicious’ tax system

The poorest UK households are hit the hardest by taxes by having to contribute proportionately more than any other income group, research by the Taxpayers’ Alliance, compiled from Office of National Statistics data, has found today (14 August).

While the top 10% of households paid a total of 34.6% of their gross income in taxes, the bottom percentile had to fork out an average of 45% of their wages – nearly half of it just for VAT and council tax.

No other income group paid more than 35.2% of their income in taxes, with the average of all groups totalling 34.2% - significantly lower than the disproportionate taxing over the poorest families.

The study by the campaign group also found that the average household paid £462 more in taxes than they received in benefits and services – an increase of almost 100% from the £274 in 2012-13.

Jonathan Isaby, chief executive of the group, said: “This analysis shows how pernicious our tax burden has become. Our tax system is neither progressive nor reasonable, and the government must stick to its spending targets so that the radical reform we need can finally happen.”

The study found that the richest families received similar amounts in benefits than the most deprived households – £6,816 and £5,150 respectively.

However the bottom 40% of households received an average of over £1,000 in housing benefit, compared to £104 for the wealthiest families.

The think tank made a series of recommendations to the government in order to balance out the taxing system, such as by sticking to their spending target and reducing the rate at which ‘sin taxes’ on alcohol and cigarettes are imposed – as they hit the poorest the most.  

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